Euro Collapses to Six Month Lows

The Euro has had another torrid night as the EURUSD fell to levels not seen for six months. The Euro-zone is presently plagued with serious fiscal concerns not only of Greece but other member countries as well. In addition, selling pressure on the Euro has mounted after a recent break of a very important technical level i.e. 200-day moving average.

In contrast, the Dollar is benefiting both from Euro woes and a general drop in risk appetite which has caused global shares to fall. Overnight, the EURUSD collapsed by over 170 pips to a low of 1.4030 before rebounding to 1.4075 (see hourly chart).

The Euro came under further pressure earlier this morning after the Purchasing Managers’ Index for January posted a drop to 53.6 from the previous month’s 54.2 against forecasts of 54.5. Expert consensus states that this result indicates that global economic recovery could well be losing momentum.

There is a major risk event today at 10.00am EST when the Philadelphia Federal Reserve's survey on factory activity will be posted. A fall from last month’s 20.4 to 18.4 is expected.

However, the dominating trading feature today could still be the financial concerns about a number of heavily-indebted Euro-zone countries such as Portugal, Spain and Greece. If this is the case, then the Euro could experience further weakness.