The euro fell to its lowest level against the greenback in more than 48 months Friday (May 14, 2010). The Fiber (EUR/USD) slipped below the 1.2500 psychological support to close at 1.2355 from 1.25366. The previous 14-month low was at 1.24562 and since this level got surpassed as well, the pair could head down even lower. However, with stochastics in the oversold area, the pair could range for a while between 1.2300 and 1.2500 before it continues its descent. Eventually, it could aim for the 1.2000 marker especially if selling pressure builds up.
On the fundamental side, the euro resumed its declined against the US dollar due to fears that some of the euro zone member countries may abandon the euro. Last week, the EU-member nations plus the International Monetary Fund (IMF) packaged an aid worth almost $1 trillion dollars to support debt stricken countries like Greece. The European Central Bank (ECB) also said that it would buy sovereign bonds. Still, a lot of investors sold the euro because the ECB’s latest move essentially undermined their own policy by helping individual governments in plugging their deficits.
Today, the euro zone’s economic calendar will be report-free. Given the lack of economic flow, the euro could just trade in a range-bound fashion.