No end in sight for euro's slide

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- The euro got no relief Tuesday, continuing its steady slide amid a global stock sell-off as worldwide concerns weighed on the shared currency.

The euro has taken a huge hit recently, sliding toward parity versus the U.S. dollar, as debt concerns in European countries have left investors unsettled. The pressure continued Tuesday as global markets took a dive, sending investors to the safe-haven greenback.

chart_ws_currency_usd_eur.03(2).png
Click the chart to view other foreign exchange rates.

The zone's currency is down more than 15% year-to-date against the dollar, and it's fallen almost 10% over the last month alone. The euro has been entrenched in its downward spiral for several weeks, and even major moves have failed to put a floor under the currency.

Bailout optimism wanes: Earlier this month, the euro got a boost after European Union officials met May 9 to discuss problems in debt-choked Greece and to approve a $1 trillion rescue package with three main components.

The biggest provision provides nearly $570 billion for government-backed loans, with the aim of shoring up confidence in shaky credit markets.

That plan is meant to throw the weight of larger, stronger economies such as Germany and France behind weaker members of the European Union, such as Greece, Portugal and Spain.

Global stocks surged, the euro soared and investors seemed optimistic that the bailout would stem debt contagion in the euro zone. But that quickly faded -- just one week after the EU announced the rescue package, the euro plummeted to four-year lows.

Investors' attention turned back to long-term problems on the Continent as troubling news trickled out of European nations. For example, Germany announced plans to ban "naked" short selling on some European bank stocks and government bonds of debt-ladened euro zone countries.

Traders saw this as an indication that the troubled nations are not yet out of the woods. The concerns have continued to weigh on the euro, and there is some speculation that the European Central Bank may move to intervene in the currency market -- which it hasn't done since 2000.

What experts are saying: "It's abundantly clear that the euro is under pressure, but frankly, I think the concerns are overblown," said Brian Dolan, chief currency strategist at Forex.com.

Though a moderate degree of concern is to be expected, Dolan said, typical to "the broader concern of global recovery being threatened by Europe's stagnation is too much."

Europe's growth estimates for 2011 and 2012 were weak even before the debt contagion concerns sprung up, Dolan noted.

"You've got to remember the euro's long-term average is $1.18," Dolan added. "Given that, plus the zone's debt and growth outlook, it's right that the euro should not be a strong currency."

Outlook: The euro will hit technical levels at $1.22 and $1.215, Dolan said, and hitting those marks would likely prompt a sell-off to $1.17 and $1.18 "in relatively short order."

Despite the recent decline, the euro won't reach parity against the dollar until 2011 or 2012, Dolan said.

Tuesday's exchange rates: The dollar was up 0.2% on the euro to $1.2345, paring gains seen earlier Tuesday as U.S. stocks rallied from session lows in afternoon trading.

The greenback jumped 0.1% versus the British pound to $1.4405. But it was down 0.1% against the Japanese yen at ¥90.19. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%4.08%
15 yr fixed3.09%3.11%
5/1 ARM3.20%3.22%
30 yr refi4.06%4.16%
15 yr refi3.17%3.20%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,803.03 -7.03 -0.04%
Nasdaq 4,744.18 31.21 0.66%
S&P 500 2,067.23 3.73 0.18%
Treasuries 2.32 0.01 0.26%
Data as of 12:51pm ET
Company Price Change % Change
Bank of America Corp... 17.13 0.01 0.06%
AT&T Inc 34.68 -0.61 -1.71%
Apple Inc 118.05 1.58 1.36%
Intel Corp 36.34 0.74 2.09%
Microsoft Corp 47.82 -0.16 -0.33%
Data as of 12:36pm ET

Sections

Digital Ally makes cameras that police officers can wear. They may get used more in the wake of Ferguson. But this is an incredibly risky stock. More

Russia's finance minister warned Monday that his country is losing up to $140 billion per year because of falling oil prices and sanctions with Western nations. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.