The euro has fallen below the important 1.30 level in this week’s headline-driven market on concerns European leaders aren’t doing enough to stem the sovereign debt and banking crisis.
Investors are worried about rising government bond yields in Europe and potential funding problems at big banks. Also, Germany has been sending strong signals that it doesn’t want to participate in another European bailout.
The ETFs tracking the euro’s movements versus the U.S. dollar are approaching their 2011 lows. CurrencyShares Euro Trust is down nearly 5% over the past month.
Markets are skeptical that last week’s EU summit produced enough to solve the region’s financial problems.
On Tuesday, German Chancellor Angela Merkel voiced her intent to oppose increases in Europe’s lending facility beyond the $659.4 billion already in place, reports Javier E. David for The Wall Street Journal.
The ESM “currently stands at 500 billion euros, which is unlikely to be enough to cover Spain and Italy if they need to retreat from the bond markets,” Kathleen Brooks, research director at Forex.com, said in a MarketWatch article.