The euro currency slide continues to gather pace as the US dollar continues to climb close to a 2 year high against the European currency which fell a further 0.46 percent to $1.24450, its lowest level since the summer of 2010. The euro has so far fallen more than 6 percent against the US dollar in May alone as concerns over European debt and Greece’s membership of the eurozone have grown. Latest Euro Exchange Rate The euro to US dollar exchange rate is 0.46 percent lower on Tuesday’s close at $1.24450, while the euro to UK sterling exchange rate is at £0.7980, or 0.16 percent lower. “Taking problems in Greece and Spain in combination, risks would still seem to be heavily skewed against the euro.� notes Gareth Berry, FX Strategist at UBS. Euro Rate Cut Key euro zone bank-to-bank lending rates fell to two-year lows on Wednesday, pushed down by a growing belief the ECB will have to cut interest rates to help shore up a banking system that is creaking at the seams. The European Central Bank, which kept euro zone rates at 1.0 percent again this month, poured more than 1 trillion euros ($1.25 trillion) of ultra-cheap, three-year funds into commercial banks in December and February. Those injections of long-term funding (LTROs) halved interbank lending rates, and the banking system is still awash with high levels of excess liquidity. Markets do not expect a third LTRO any time soon, but have in recent days started placing bets on a rate cut following a run of poor data and mounting evidence that the financial systems in Spain and Greece are close to seizing up. Many economists now expect at least one 0.25 percentage point cut in the coming months, possibly as early as next week which would also put pressure on further falls for the euro currency.

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