For a third consecutive week the Euro has dropped against the US Dollar after being hit by some concerning news from the Eurozone.
The revelation that Cyprus was preparing to hold a vote on a controversial, and unprecedented, proposal to impose a levy on bank deposits in order to raise essential funds sent the foreign exchange market into freefall and the Euro tumbling.
After the Cypriot Parliament voted against the proposal the Euro dropped further, to trade in the region of a four-month low against the US Dollar.
The common currency clawed back some ground as the market digested the news that Russian investors were entering negotiations to buy a Cypriot bank, while the ECB pledged to aid the nation until a new bailout agreement was drawn up.
Any Euro gains were swiftly lost however after data released on Thursday morning confirmed fears that the downturn in the 17-nation currency bloc is worsening. Reports compiled by Markit Economics showed that Eurozone and German services/manufacturing contracted in March.
And by Friday the Eurozone had received another blow.
As Standard and Poor’s cut Cyprus’ credit rating to CCC from CCC+ with a negative outlook, it emerged that the nation’s talks with Russia had broken down.
Without Russia coming to the rescue Cyprus has only the ECB to turn to, and the central bank issued the nation an ultimatum.
Either a new bailout agreement is reached by Monday or Cyprus will be refused the financial aid it needs in order to remain a part of the Eurozone.
As the week comes to a close the Euro is trading within the region of a four-week low against the US Dollar and a five-week low against the Pound.
While the Cyprus uncertainty is the main factor wearing on the common currency it was also adversely affected by the news that German business confidence declined unexpectedly in March, dropping from a ten-month high of 107.4 to 106.7 – the first fall for five months.
Euro Exchange Rates (as of 11:02 am GMT)
The Euro is trading against the Pound in the region of 0.8516
The Euro is trading against the US Dollar in the region of 1.2937
The Euro is trading against the Australian Dollar in the region of 1.2407
The Euro is trading against the New Zealand Dollar in the region of 1.5564
The Euro is trading against the Canadian Dollar in the region of 1.3256