The major driver of the currencies market last year was the crisis occurring over in Europe.

For most of the last 18 months, investors have become increasingly concerned over the financial health of some of Europe's largest economies.

It all begins in Greece

The initial concerns developed early in 2010 as worries about the fiscal position of Greece started to generate heat in the markets.

Once Greece was bailed out by the European governments, Ireland was the next country to start to look unsteady.

While Ireland has now been rescued, there remain concerns about even larger economies, including both Spain and Italy.

PIGS become STUPID

However, the debt-laden European countries, known as the PIGS (Portugal, Ireland, Greece and Spain) slowly changed into the STUPID (Spain, Turkey, United Kingdom, Portugal, Ireland, Dubai).

If countries like Spain and Italy are also forced to the wall, then it is conceivable that we might even see the Euro zone split up. This would be preceded by steep falls in the value of the Euro.

So, from this perspective, there's little wonder why the Euro has been one of the worst performing currencies last year!

A tortuous journey

The Euro started 2010 at US$1.43 and fell all the way to US$1.19 in the middle of the year as the crisis reached its nadir for the year.

By the end of the last year, however, the Euro had staged a recovery, finishing 2010 at $1.30.

The Euro has started the new year in an even stronger position. Earlier in January, the Japanese government said it was willing to buy some of the distressed debt offered by European governments.

This saw a strong gain in the Euro in the first month of this year. In fact, the Euro is up almost 10% since the Japanese government made their announcement.

Where to from here?

The fate of the Euro, the most traded currency apart from the US dollar, is now up for debate by analysts and traders alike.

In general, the market has become more positive toward the Euro as key government raise funds in the debt markets and economic growth improves.

However, there are plenty of people that still warn about the fate of the Euro.

One person who remains nervous about Europe is world-famous hedge fund manager George Soros. Soros recently warned that the European Union might disintegrate as a result of the European debt crisis.

But whatever happens, we are guaranteed to have an exciting year for forex traders.

For more education on the exciting world of currency trading, why not register for a free workshop with ForexCT? Find out more on our website at www.forexct.com.au or call us on 1800 367 392.