Euro Falls Below $1.16 on Tuesday Trade

The euro slipped below the $1.16 level for the first time since November 2017, as the bounce seen at the start of the week faded and investors took a grim view on the prospect of Italy’s elections.




The currency drops at $1.1568 a euro after slipping overnight to $1.1607, the lowest since November 9 of the previous year. It has fallen 4 percent this month amid a resurgent dollar and rising tensions over the euro zone’s current political situation and economy.


The move on Tuesday also came amid a second day of intense selling of Italian government paper.


On Monday, the currency surged $1.1728 after Italian President Sergio Mattarella rejected a vocal critic of the single currency as economy minister.


Financial markets fear that the elections, that could take place as early as August, are seen as a quasi-referendum over Italy’s role in both European Union (EU) and euro zone could end up strengthening Eurosceptic parties even further.


“The sudden, broad widening of euro zone yield spreads caught market participants off guard and is a key factor in the euro's sell-off. Basically, German bund yields are declining and this is negative for the euro,” said Yukio Ishizaki, senior currency strategist at Daiwa Securities in Tokyo. “There are still a lot of euro long positions that had been built up during the currency's bull phase until May that need to be unwound, and the euro's decline looks set to continue indefinitely.”


The tensions also dragged the euro down against the British pound at €1.145 on today’s exchange.


Meanwhile, the euro EUR/JPY exchange is currently at 126.620 yen-- nearing to an 11-month low of 126.520.


Shusuke Yamada, chief Japan FX strategist at Bank of America Merrill Lynch said, “The euro’s weakness is a key factor behind the yen’s strength. The yen’s strength relative to the euro is in turn lifting it against the dollar.”


A decline in US Treasury yields puts the greenback lose about 0.4 percent to a three-week low of 108.910 a dollar. On Monday, the currency rose to 109.830 yen as US-North Korea summit plans appeared to get back on track. However, the relief has been quickly eclipsed by the political concerns rising on the euro zone.

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