Greece Still in the Center of Forex

The EUR reached its highest in close to a month on Monday, surging 1 percent on the USD and JPY as investors who had sold it scrambled to buy it back after euro zone finance ministers conceded to a Greece rescue package.. The euro's increase heavily affected the dollar, helping the GBP climb to its highest in nearly two months, while the dollar index plunged through its 30- and 55-day daily moving averages.

Euro zone finance ministers approved a 30 billion EUR aid package to Greece if necessary, with at least 10 billion EUR also expected from the International Monetary Fund, a move likely to calm markets in the near future. The massive financial safety net for Greece boosted investor appetite for riskier assets, helping the AUD to its highest in a half a year and the NZD to its strongest since late January earlier in the day.

The Greece rescue package agreement was likely to help the country raise funds more easily but the problem was unlikely to disappear, said Robert Rennie, chief currency strategist at Westpac, Sydney. "The way the market is short euro, this could give a leg up to around the next technical resistance at $1.3820. But can it sustain a move higher than that? I am not sure. We may see some selling emerge around there."

Greece will test market appetite for its debt with an auction of 1.2 billion euro Treasury bills on Tuesday after investors recently dumped Greek assets on mounting worries about the country's debt crisis.] Traders and analysts said the auction results will be crucial for the EUR as well as other risky assets. Scepticism about how Greece would resolve its debt problems has seen short positions stack up against the euro this year.