Spain and Portugal Drag Euro Down

The European Central Bank confirmed in the last hour that it will keep its Interest Rates unchanged at 1.00%. This announcement has followed a poor night for the Euro as the Euro-zone is currently plagued by growing fiscal concerns for some of its member countries.

Both Spain and Portugal are now facing financial problems that are on the same scale of those of Greece. The safe-haven Dollar benefited from these developments as the Euro became increasingly more vulnerable. The Dollar is also being assisted by strong US economic data releases made this week.

The Euro is expected to weaken further over coming weeks and any rallies are anticipated to be short-lived. Overnight, the EURUSD hit a seven-month low at 1.3825 and has currently dropped further posting 1.3815 at present (see hourly chart).

The ECB president, Jean-Claude Trichet, is presently making his customary post-rate decision speech. Should he refer to the fiscal problems of Greece, Spain and Portugal, then such remarks could trigger substantial volatility in the currencies markets.

Earlier today, the Bank of England kept its asset purchase program unchanged at 200B pounds Sterling. As a result, the GBPUSD fell to new lows of 1.5805 before recovering to 1.5860 presently.