Euro Extends Three Day Decline amid Greece Concerns, British Pound Sustains Narrow Ch

DailyFx · February 15, 2010, 4:50am

The Euro weakened against the greenback for the fourth successive day amid ongoing concerns regarding Greece’s budget deficit, leading the EUR/USD to hold the downward trending channel as the exchange rate looks to test the fresh yearly low of 1.3530.

[U][B]Talking Points[/B][/U][B]
• Pound: Holds Range From Last Week
• Swiss Producer Prices Tumble an Annualized 1.3%
• Euro: Extends Three day Decline Against the Greenback

Euro Extends Three Day Decline amid Greece Concerns, British Pound Sustains Narrow Channel[/B]

The Euro weakened against the greenback for the fourth successive day amid ongoing concerns regarding Greece’s budget deficit, leading the EUR/USD to hold the downward trending channel as the exchange rate looks to test the fresh yearly low of 1.3530. Meanwhile, former ECB executive board member Padoa-Schioppa said the crisis in Greece will “last a long time.”

The Economic docket overnight was quiet as risk aversion seemed to be the center focus of many traders amid ongoing Greece concerns, and renewed fears in the Dubai debt markets. In Switzerland, producer & import prices added 0.3% in January after rising 0.1% the month prior, with economists’ expectations of 0.2%. The better-than-expected reading markets the second consecutive monthly advancement and the largest percentage gain in the reading since July 2008. Meanwhile, prices tumbled an annualized 1.3% after tumbling 2.5% the previous month. Looking ahead, investors are weighing in a zero percent chance that the Swiss National Bank will raise its benchmark interest rate twenty five basis points at its next rate decision meeting on March 11th, according the Credit Suisse overnight interest rate.

The British Pound maintained the narrow range from last week and slipped to a intraday low of 1.5613 following a rise in risk aversion, and the GBP/USD may continue to test the lower bounds of the channel formation as the U.S. dollar rallies across the board. However, it seems as though the pound-dollar is carving out a near-term bottom as the RSI climbs out of oversold territory, and we could see the pair test the upper bounds of the downward trending channel over the following week as the economic docket is expected to reinforce an improved outlook for the U.K. However, as the Bank of England is scheduled to release its policy meeting minutes on Wednesday, dovish statements could weigh on the exchange rate as the central bank maintains a cautious outlook for the economy, and a drop in interest rate expectations could lead the pound-dollar to break below the 1.5500 level as the MPC maintains the option to increase the scope of its asset purchase program.

The Swiss franc lead the decline among major currencies against the greenback, tumbling 0.27%, while the Aussie dollar was the only major gainer against the buck, rising 0.03%.Looking ahead, the economic docket going into the U.S. session remains bare, with many traders off the desks for Presidents’ Day Holiday in the U.S. and Family Day Holiday in Canada.

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