Euro Falls as Stress Test Results Fail to Alleviate Banking Risk Concern

By Catarina Saraiva and Oliver Biggadike
Jul 24, 2010

The euro fell, ending its longest weekly rally in nine months versus the dollar, on concern stress tests of European Union banks failed to identify sources of weakness that would aggravate the region’s debt crisis.

The 16-nation currency depreciated against the majority of its most-actively traded counterparts, slumping the greatest amount versus growth-sensitive currencies such as the Australian and New Zealand dollars. Tests showing that only seven banks flunked the EU’s crisis scenario failed to ease concern lenders may lack sufficient capital, pushing the euro to reverse gains recorded earlier in the week.

“The euro’s definitely had its ups and downs,â€