After four days of solid gains, during which the Euro gained more than 3.5% against the Dollar, the single currency is on the backfoot today and is down slightly against not only the greenback but also versus all other major currencies.
Euro weakness can, at least to some degree, be explained by disappointment following yesterday’s EU summit. European leaders failed to reach an agreement on the issuance of the so-called ‘corona bonds,’ which in essence are a pan-European bond where all members of the single currency share the risk. Germany and Holland refused to step in and share the risk with their less well-off partners in the south of the continent. This lack of solidarity between north and south, rich and poor, is undermining the single currency as another eurozone crisis now looms on the horizon, with echoes of 2012. The spread between German and Italian bonds continues to increase, in a development apparently faced with some indifference by Northern European countries.
