Forex Market Review – Euro weaker as focus turns to Greek debt

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The euro rally resulting from the Fed announcement on rates lost momentum as the focus turns back to the European debt crisis, especially on the ongoing Greek debt negotiations and Portugal’s worsening debt situation. Markets will pay attention to a speech by ECB President Mario Draghi later in the day.

 

EURUSD was little changed in Asia after dropping from a five-week high on Thursday. The pair opened the session at 1.3105 and was mostly rangebound.

 

The drop in risk appetite helped the dollar recover some losses.   The dollar index which tracks the U.S. dollar against a basket of currencies recovered from a seven-week low. Later in the day, the US gross domestic product figures for the fourth quarter of 2011 are to be released, so market focus will be on these data. A 3.0 percent growth rate is expected compared with 1.8 percent in the previous quarter.  Any encouraging signs that the US economy is improving will help market sentiment.

 

The biggest gainer in the session was the Japanese yen as uncertainty over the Greek debt situation is pushing investors into safe haven currencies such as the yen. This pushed the USDJPY down from 77.48 76.88. Meanwhile, EURJPY fell to 100.75 from 101.57.