The USD ended the afternoon mixed and relatively unchanged versus the other majors, but gained marginal value against the euro. There are fresh concerns that EZ policy makers are unlikely to provide a rescue package for Greece at a summit later this week. Worries about Greece's fiscal problems have brought the Eurodollar down to a 3-week low. The euro has also declined to an all-time low versus the Swiss franc.
Traders are speculating that pressure on the euro will continue as we head towards a summit of European Union leaders on Thursday and Friday. German Chancellor Angela Merkel, facing fierce opposition to a Greek bailout, said there would be no decision on Greek aid at the EU summit. ECB member Vitor Constancio said that IMF loans would not be enough to satisfy Greek monetary needs. The combination of a slow reaction to the Greek problem and weak euro zone growth could prevent the European Central Bank from raising interest rates until well into next year, thus keeping long-term pressure on the EUR.
A report released by the US government today showed that existing home sales fell less than expected in February, giving a boost to risk sentiment and some support to the euro. Some analysts believe that the euro's 5 percent drop against the dollar since the start of the year may an exaggeration, however GFC Markets has serious concerns about the pressures that will be plaguing the euro well into 2011 and the distinct possibility that the European currency could be heading into troubled waters in the months ahead.