By: Barbara Zigah

Following a slide earlier in the Asian session, the Euro managed to edge up against the U.S. Dollar as market players expect some short covering to offer a temporary respite to the common currency. Traders said that the Euro fell to a low of $1.4285 during the session; as at 2:03 p.m. (JST), the Euro was trading at 1.4336.

Greek debt remains at the core of the Eurozone’s problems, and it appears that policymakers there are not closer to finalizing an agreement that would have private investors taking part in Greek debt restructuring. Germany’s financial sector recently backed the government’s position to involve private investors in another Greek bailout, but Germany’s bankers are clearly not in favor of a “soft” restructuring, i.e. extending maturities. It was reported that banks in France, however, have agreed in principle, that Greek debt should be rolled. Jean-Claude Juncker, the Chairman of the Eurogroup, has said that private creditors’ participation is essential, but must be of a voluntary basis.

One currency analyst in Tokyo believes that the Euro is likely to slip towards $1.3968, the May low, as the debt crisis escalates even in spite of a potential rate hike increase by the ECB. Jean-Claude Trichet, the ECB President, recently signaled that another rate hike was under consideration, though the ECB forecasts for inflation were unchanged.