Fitch has added to the already exacerbated Greek debt concern, by moving on to downgrade Portugal's long-term foreign and local currency issuer default ratings by one notch to AA- from AA. The outlook has also been rated as negative, and the rating agency stated its concerns about the impact of the recent financial crisis on the Portuguese economy and the potentially worrying fiscal effects.

The EURUSD dropped to its lowest point since May 2009 by trading as low as 1.3340, down more than 1% during the session. It seems that a buildup of stop losses had sent the pair plummeting below the 1.3440 level to find some support at 1.3400. When the level was penetrated, a set of stops related to some options was triggered, sending the euro to day's lows.

It's interesting to note that, although the release of the German Ifo Business Climate was much better than expected at 98.1 (previous at 95.2 & expected at 95.8), it had no effect on the weakening euro. It seems that the markets will be expecting the unexpected from the EU summit on Thursday and Friday, and some very concrete plan on how to tackle the Greek debt problem before they think about reversing this view on the euro. The idea of Greece leaning more towards the IMF instead of its partners to solve its problems, would demonstrate more the inability of the EU to tackle it's domestic affairs alone, adding further stops to the euro weakness.