The EUR seems to have sustained its bearish momentum despite yesterday's brief upward tick. With a stellar performance against the Australian and Canadian Dollars, the EUR actually finished Monday at the 1.5795 and 1.4680 price levels, respectively. Economists remain weary, however, given economic worries surrounding member nations of the European Monetary Union (EMU).
The reason many analysts claim that downward pressure still exists on the 16-nation European currency is because Greece's plan to tighten its spending has created some concern that the current plan doesn't do enough. Moreover, Portugal announced that it would increase its government's spending options, which has a number of market participants unnerved. A report out of Europe yesterday also showed the Sentix Investor Confidence report dropping much further than was anticipated, highlighting an upcoming downturn in the Euro-Zone.
Yesterday's upward movement of the EUR shouldn't be taken as a serious indicator of continued bullishness. With the US Dollar consolidating against most of its pairs, there exists a likelihood that the USD will break-out soon and the EUR will correct back downwards against the majority of its pairs. Many investors out there are beginning to short the 16-nation currency and forex traders would be wise to take note.