EUR/USD Back Down to Lower Range on European Worries

Euro/dollar fell back to the previous range after moving higher earlier in the day. The demands of Finland from Greece are seriously complicating the situation in Europe. In addition, fresh debt worries from Spain and worries about the global economy take their toll on the common currency.

Finland is stubbornly refusing to participate in further aid for Greece until it gets some guarantees from the  Mediterranean country. The reported deal on securing collateral from Greece triggered similar demands from Austria and The Netherlands.

The talks continue and may cause a delay in the best case scenario. In the worst case scenario, this brinkmanship with Europe is very problematic and could send the continent into a dangerous turmoil.

Former Federal Reserve Greenspan also joined the chorus seeing a collapse of the European Monetary Union. This adds to the weight as well.

In Spain, more regions acknowledged that their deficit target won’t be met in 2011. They will have to lean on the government.

Earlier in the day, the German ZEW Economic Sentiment disappointed with a huge plunge. This came after purchasing managers’ indices came out better than expected and pushed the euro to a higher range. It touched 1.45.

This is now erased. EUR/USD is at around 1.44, in the middle of the  1.4350 – 1.4450 range. Further support is at 1.4282.

For more on the pair, see the euro dollar forecast.

Also on the other side of the Atlantic, things aren’t rosy: US new home sales disappointed with a drop to 298K. Last month’s figure was revised to the downside.

The whole world is slowing down, if not already in recession.