Euro Extends Decline Against Dollar amid Growing Concerns

The euro resumed its decline against the U.S. dollar, after its previous advance on the news about the EU loan package, as the concern arose that the budget cuts required for the package will hurt the region’s economic growth.

Gross domestic product increased by 0.2 percent from the fourth quarter in the nations of the Euro-zone. The economists say that, while this growth is better than expected, the news are considered positive only because the expectations were abysmal. Compared to the pace of the economic recovery worldwide the European one can be considered rather slow.

While some news are positive for the euro, like rising Spain’s and Greece’s bonds after the nations announced their plans to cut the budget spending, the general outlook remains bearish. The attempts to rescue the indebted nations may actually increase the total debt of the whole region. Some experts go as far as say that the EU governments gave up on the euro and don’t care about its future. The forecasts emerged that the euro may fall to parity with the greenback.

EUR/USD traded at 1.2640 as of 17:23 GMT today after opening at 1.2661 and reaching its daily low of 1.2605. EUR/CAD traded at 1.2877 down from its opening level of 1.2935. EUR/JPY traded near 117.88.

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