Forex Market Review – Euro stalls after Greek debt deal postponed

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The euro see-sawed against the dollar due to uncertainty surrounding the Greek debt talks that were expected to end today but will resume tomorrow. The Greek government needs to reach an agreement with creditors in order to receive a second bailout that will help Greece avoid a default by mid-March.

 

EURUSD fell sharply since the open of the trading week and extended losses into New York trading, falling to a low of 1.3027 then bounced on short-covering later in the US session to 1.3140. There is some optimism in the market that a deal will be reached to avert a default and this is helping support the single currency from a drop below the key $1.30 level.

 

Sterling regained losses made against the dollar, to rise in the US session from 1.5728 to 1.5839. Gains are expected to be capped as the Bank of England policy meeting is on Thursday, and further easing is expected to be announced. This would weigh on the pound.

 

USDJPY was little changed, remaining  above 76.50. A further rise in yen is kept within control as investors fear an intervention by the Bank of Japan after the central bank governor Masaki Shirakawa said he will take appropriate steps as needed to cap yen strength.

 

Crude oil ended lower versus Friday due to the European debt uncertainty. This weighed on the commodity-linked Canadian dollar which moved off a three-month high against the greenback. that was reached on Friday. USDCAD  fell to the lowest level since October, touching 0.9927 on Friday after good US jobs data, but moved up today to as high as 0.9990.