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Oh my, it looks like the euro is poised for more losses in the days to come. Apparently, news broke out yesterday that Standard & Poor, a credit rating agency, had enough of Greece’s shenanigans and decided to downgrade the country’s sovereign debt rating to… wait for it… Junk! It appears that this Greek drama series has more episodes than The Simpsons.

The thing is, Greece has been on the spotlight for a long time now and everyone probably knew that it was bound to happen sooner or later. Surely, that can’t be the only reason that drove the euro lower across the board! If you must know, while all that was going on, Portugal also had its A+ sovereign debt credit rating downgraded to A-, giving the euro a double black eye. Ouch!

Yesterday’s episode once again placed a huge crack on the market’s already brittle sentiment. As if Greece’s need for additional help was not enough to give hurt, Portugal’s debt downgrade delivered a knock-out blow that drove the market bulls down on the mat. It was a bloodbath not only in Wall Street but everywhere else. With risk aversion coming out with a bang, a herd of investors and traders were sent scurrying back to the safety of the greenback and the yen.

This fresh drama surrounding the euro zone caused some major volatility in the financial market. Higher yielding assets and non-dollar currencies sold-off like popsicles during summertime. The EURUSD, for one, sunk by more than 200 pips in just a day!

Every time bad news has come out regarding Greece, we’ve seen the euro slide lower and lower. This past week, the euro dropped when German Chancellor Angela Merkel raised concerns about Greece’s ability and plan to fix its debts problems. Like I said, a lot of traders got déjà vu the following day, when both Greece’s and Portugal’s credit ratings got downgraded.

Looking over at my charts, I see that the down move was not a swift one. Rather, sellers have pulled the EURUSD on a slow and steady pace. Over the past week or so, it seems that traders just have no fundamental reason to buy up the euro, which has caused buyers to stay away. With all the recent news, risk aversion has taken its toll, and traders have unwound their positions in risky assets including of course the bonds of Greece and Portugal.

Looking ahead, we may see the euro continue its steady decline, especially if more news of potential downgrades from other countries sprouts up. If the rest of the GIIPS (more specifically, Spain, Ireland, and Italy) start showing weakness, we could see the EURUSD head on over to join the PARITY. Get it? Party? Never mind…

So when will this debt drama end? Will Portugal start a new debt saga of its own? I hope not.

For now, it’s probably best that the EU officials tone down their negative comments *cough! Germany! cough!* and just focus on preventing the debt crisis from spreading. Farfetched as it sounds, Greece could use a morale boost later on so that they could find it easier to secure funds through its bonds. Everyone already knows how much trouble Greece is in, so let’s cut the dissing!

The European Commission expects the EU-IMF bailout program to be completely activated by the first week of May. If all goes well and no other glitches pop up, debt contagion fears could subside and provide the euro some relief soon.