Euro drops in Line with potential European Financial Crisis

The euro is on the way to another currency crisis as response of the problematic financial situations in Ireland, Portugal and possibly Spain. Financial analysts report a second low month of the European currency against the US dollar.

The volume of foreign exchange trading, however, stayed to be light as the US national holiday Thanksgiving approaches.

Director of currency strategy at HSBC, Paul Mackel, underlines: "Things are a bit sidelined due to the U. S. holiday but there is still a lot of nervousness about euro zone peripheral debt problems. So the euro remains a sell into rallies and not a buy on dips."

Financial analysts doubt that the financial capacity of a euro zone rescue package would be sufficient to support a large nation such as Spain in case of need.

The euro dropped 0.2% at $1.3300, a figure that even lowers the recent average of $1.3303. Against the yen, the euro dropped 0.12 % to 111.20 yen EURJPY=R. Specialists expect current investors to suffer from heavy losses.

European Central Bank Governing Council member, Alex Weber, in contrast gives a positive prognosis on the survival of the euro after the currency crisis.

Senior currency strategist at Rabobank, Jane Foley, underlines: "Things are different. We have QE2 which is dollar negative. Also we are seeing Germany recover at a stronger than expected pace and some in the ECB are still hawkish despite the peripheral debt issues."