By: Barbara Zigah

The common currency continues to hold onto most of last week’s gains and is poised for more as investors pinned their hopes on the European Union’s policymakers, that a decisive response to the Eurozone’s debt worries will be addressed later this week. As reported at 12:31 p.m. (JST) in Tokyo, the Euro was down 0.2% against the U.S. Dollar, trading at $1.3855 on some profit taking. Last week, the Euro rallied some 3.5% on several factors including a pledge by the French and German governments to recapitalize Eurozone banks, and Slovakia’s parliamentary approval of an increased EFSF. Still, analysts say that the rally last week was primarily the result of short-covering investors, and resistance for the Euro is likely at $1.40, because contagion fears are still too strong to overcome.

Participants at the Group of 20 meeting, which was held in France, over the weekend talked about the issues facing them as regards a Greek debt restructuring; according to the German finance minister, it’s unlikely that the Greek problem can be solved without larger haircuts for the private bondholders. Currently, there is an agreement in place for bondholders to voluntarily write down 21% of their holdings in Greek sovereign bonds, and Eurozone officials are saying that that is insufficient, with possible losses likely between 30% and 50%.