Euro clawed back yesterday’s losses and edged up during European trading hours, mostly due to short covering as investors square positions ahead of a long holiday weekend. Some markets will be closed in the U.S. and in Europe on Monday. There overall outlook is bearish for the euro, with alot of uncertainty regarding Greece’s possible exit from the euro, with much depending on the outcome of the country’s elections on June 17. EURUSD rose to a session high of 1.2601 from an early session low of 1.2520. Yesterday euro hit a near two-year low of 1.2514.
The economic calendar was relatively quiet in the European session, with focus turning to the final revision of May’s University of Michigan consumer sentiment index later in the U.S. session. Forecast is for the original reading of 77.8 to be confirmed, which is the highest reading since January 2008. This would be positive for the dollar.
Sterling took a pause in its recent downtrend against the dollar, consolidating losses overnight after being hit hard from weak GDP data yesterday. GBPUSD broke out of a range from overnight and opened in Europe at 1.5652 to climb to 1.5694.
Dollar eased back against the Swiss franc in Europe on profit taking after hitting a three-month high in the Asian session. USDCHF fell from 0.9604 to 0.9539. EURCHF has been volatile since yesterday on speculation that the Swiss National Bank might impose a deposit tax, which is like a negative interest rate, in order to curb the franc strength. Yesterday EURCHF spiked to 1.2074 but has eased to 1.2012 today.
EURJPY was little changed during the session, after the pair rose to high of 100.31 and fell back to session open level at 99.90. USDJPY had retraced to a high of 79.81 in Asia and fell back to 79.49 in Europe.