Euro Boosted as Details of Deal Emerge

The Euro surged higher against the U.S. Dollar and Japanese Yen during Monday’s Asian trading session following the news that Cyprus had met the E.U.-imposed deadline and was able to hammer out details for a desperately needed bailout loan which could prevent a financial breakdown. Without the bailout loan’s fiscal lifeline, investors had been concerned that Cyprus would be forced out of the Eurozone.

The bailout plan calls for the gradual closure of the Popular Bank of Cyprus with a corresponding shift of E.U. guaranteed deposits (i.e. those deposits of less than €100,000) to the Bank of Cyprus; the plan received the endorsement of the E.U.’s finance ministers and will not need to be approved by the Cyprus parliament.

As reported at 11:06 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3043, a gain of 0.4% and well off the $1.2985 price ahead of the Cyprus news. Currency analysts believe that a short-lived bounce to around $1.3150 is possible but that eventually the Eurozone’s economic fundamentals will weigh on the common currency. The EUR/JPY pair rose 0.8% to trade at 123.75 Yen on the day while the USD/JPY pair edged up by 0.5% to trade at 94.89 Yen.