Forex News Review – Euro recovers losses, ends week above $1.27; CAD falls on declining oil

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The euro reversed its losses in the U.S. trading session to trade above $.127, gaining 1.2 percent from the bounce off a four-month low. EURUSD had bottomed at 1.2641 in early European trading but steadily rose on short covering throughout the day to hit as high as 1.2793. After a sharp decline in the last four days, the single currency was oversold and due for a correction.

Throughout the week the headline news from Europe put the euro under pressure, making investors nervous about Greece and its possible exit from the euro, which may consequently result in contagion and spread to Spain whose banks are very fragile. Yesterday sixteen major Spanish banks were downgraded by Moody’s.

EURGBP gained 0.5 percent on the day to climb to a high of 0.8077.

EURJPY trimmed some losses and bounced off a three-month low from 100.19 to 101.09.

Yen gained against the dollar on safe haven demand, erasing an earlier loss as USDJPY slipped to 79.00, the lowest since February 17.

GBPUSD tracked the EURUSD higher and rose to 1.5836 from a two-month low of  1.5731.

The Australian dollar was flat against the US dollar this Friday, trading the day between $0.9793 and $0.9882, near five-month lows.

The Canadian dollar declined after earlier making its biggest gains of the week versus its U.S. counterpart. The loonie briefly gained following data showing an increase in Canadian inflation. CPI rose 2 percent in April from a year ago, compared with a 1.9 percent gain the prior month. USDCAD fell after the data to 1.0137 but rose again to 1.0222. Falling crude oil prices, a major Canadian export, weighed on the loonie.