EUR Trading Outlook (18-05-2012)

The euro (EUR) plummeted against the dollar sliding to a four-month low at 1.2655 from 1.2748 as risk aversion dominates the markets. World equities tumbled as investors fear that Greece may leave the euro after the second election in the country in June. Poor economic data from the US and concerns about the growing instability among Spanish banks further weighed on the single currency. Credit rating agency Moody’s downgraded 16 Spanish banks while shares in Bankia, the state-rescued lender plunged on news that clients have withdrawn 1 billion in the past week. Fitch downgraded Greece’s rating from BI to CCC, the lowest possible grade for a country not in default, citing the heightened risk that the country may leave the eurozone.