The euro ended another trading week with a hike caused by optimistic mood about the outcome of the parliamentary elections in Greece.
Having hit a one-month high of 1 US dollar 27.4 cent, the euro retreated to the levels of last week’s end.
The second round of the Greek elections was won by the conservatives who broadly back an EU/IMF bailout package.
However, the solution to the Greek problem alone is not quite enough to spur bullish sentiment on the market. Euro Area bond yield is still rising which might further exacerbate the Eurozone crisis.
The cost of borrowing for the Spanish government peaked to a record high. On Monday Spanish bond yield spiked to 7.139%.
Spain has recently been the centre of attention. Not only does the country represent a debt crisis epicenter, but it is also developing a credit crunch. The national unemployment is extremely high: each fourth citizen is out of work now. Moreover, the Spanish economy plunged back into recession. With all these factors taken into consideration, the euro seems to be unlikely to go up in the long term.