Dollar Finishes Lower in Lackluster Trade
The U.S. Dollar finished the day session lower in lackluster trading with very few highlights. Profit-taking overnight led to a lower opening, but news that S&P lowered the credit rating of Spain helped the Dollar limit losses. Later in the trading session, the Dollar reversed course and began to lose ground once again as traders reassessed the fundamentals and decided that the recent rally may have been overdone.
Global debt concerns are the main issue this week and should continue to be until countries like Greece and Dubai step up and back their debt commitments. Earlier in the week, a flight-to-quality rally in the Dollar was triggered by credit rating downgrades in Dubai and Greece. Traders will continue to monitor these situations for further developments. The biggest fear is the spread of credit problems. At this time, the concerns have been confided to small areas, but today the S&P Corp. added Spain to the watch list.
At the mid-session, the EUR USD erased all of its earlier gains, but recovered by the close. The intraday weakness was triggered when the S&P Corp. lowered the debt rating for Spain. Yesterday, Fitch cut the credit rating of Greece. Traders are reacting as if a trend is developing. The chart pattern suggests that the next downside target is 1.4625 although it is likely this will not take place until after a formidable short-covering rally.
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