Forexpros – The euro fell against the U.S. dollar despite the European Central Bank’s loan package, as analysts believe its simply not enough to solve the debt crisis.
EUR/USD hit a low of 1.3026 during early U.S. trade. It is currently trading at 1.3077 off by 0.05%.
The pair was likely to find support at 1.3047 and technical resistance exists at 1.3091.
The single currency climbed to a weekly high earlier prior to turning negative even as the ECB upped the loan package to EUR489 billion in 1,134 day loans to banks.
Most economists project that the euro zone will fail to grow next year due to austerity measures and the debt crisis. It is believed that the ECB’s loan package simply is not adequate to stem the debt tide.
Barclays has estimated, per Bloomberg, that today’s operation will put EUR193 billion of new money into the system, with EUR296 billion accounted for by maturing loans.
Borrowing costs climbed in Italy and Spain signaling yesterday’s optimism will be short lived, despite the euro injection
Noel Herbert of Mitsubishi UFJ Securities explained the problem to Bloomberg, “Much like the warnings of catastrophe are seldom fulfilled, so too the promises of resolution. In the end, you risk more euros in the system and you don’t solve the solvency issue.”
In addition, U.S. existing home sales in October were revised downward by almost 14% while November existing home sales numbers significantly missed estimates.
The Euro was also lower against the pound with EUR/GBP dropping 0.30% to hit 0.8327.
Investors await U.S. jobless claims Thursday.
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