The euro fell sharply against all its major rivals during last week's trading. The euro dropped about 400 pips vs. the U.S. dollar, marking a 6-week low for the European currency. The euro also fell about 200 pips vs. the British pound and the Japanese yen.
The euro's bearishness came as a result of the European sovereign-debt concerns. The main concerns dealt with the Irish economy, and its possible difficulties to pay debts. Several reports have recently stated that Germany is pressing Ireland to seek aid before tomorrow's meeting of European finance ministers, in order to calm market volatility. Germany's Chancellor Angela Merkel has even publicly clashed with European Central Bank Jean-Claude Trichet on the matter. However, Ireland official have been cited saying that aid talks will not take place as the economy is not in need for external assistance. Nevertheless, current estimations are that Ireland will eventually request an aid of about 80 bullion euros ($110 billion) between years 2011 and 2013.
As for this week, traders' main focus should remain on Ireland's bailout concerns, as this is likely to be the main economic topic for the near future. Reports regarding an aid package are likely to support the euro, just as continuous speculations that Irish bond-holders will have to anticipate in the burden could weaken the currency further. Traders are also advised to follow the German ZEW Economic Sentiment release on Tuesday. The German economic condition becomes even more imperative now that another nation of the region might require an external aid, and economic data from Germany is likely to have a large impact on the market.
