Forex Market Review – Euro bounces above $1.27

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Euro extended its decline against the dollar going into the European trading session, falling to a fresh four-month low. EURUSD saw an early bounce to above the 1.2700 level as it would be hard to break the key support level of 1.2600 today. Short-covering ahead of the weekend has contributed to the bounce, seeing the single currency up 0.5 percent during the session.

 

The economic calendar was light today but euro is vulnerable to headline news from Europe, with Greece and Spain remaining the key drivers behind euro bearishness. Fear of Greece exiting the euro continues to pressure the single currency and will probably continue until more developments from the next elections in Greece in mid-June.

 

GBPUSD fell to two-month lows of 1.5731 just before the start of the Europe session but was due for a retracement and moved back up above the 1.5800 level. Sterling has been under pressure since the Bank of England earlier this week released a dovish quarterly inflation report and left the door open for more quantitative easing as recent data show that the U.K economic has officially entered a recession.

 

USDJPY remains on the down-side after the pair plunged over 1 percent on Thursday following disappointing U.S. economic data, reaching a three-month low of 79.12 where it is consolidating. EURJPY bounced off an early three-month low of 100.19 and retraced to 100.99.

 

AUDUSD fell to its lowest since November 2011in Asian trading, touching 0.9793 and bounced into the European session, gaining 0.8 percent.

 

Looking ahead, going into the U.S. trading session, there are no important data due on the economic calendar. There will be some focus on the weekend G8 Summit but no economic policy decisions are expected, though U.S. President Barack Obama hopes to promote discussion on steps to resolve the euro zone crisis.