Euro Wallows in Wake of Cypriot Deal

The Euro held close to a 4-month trough against the greenback after investors fears were ratcheted up a notch in the wake of the Cypriot bailout deal. The concern is that future bailout terms for other highly indebted Eurozone nations might include such onerous conditions as those currently seen in Cyprus which includes taxes on bank deposits.

As reported at 11:02 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2855, close to Tuesday’s multi-months low of $1.2828. The Euro was also trading lower against other commodity linked currencies, with the EUR/AUD pair trading at A$1.2274, moving less than 50 pips from Tuesday’s low of A$1.2255. With the Easter holidays just ahead, analysts believe that the common currency is likely to stabilize somewhat has hedge fund operators are moving in to cover their short positions.

Meanwhile the Japanese Yen continued to dip lower as expectations grow that the Bank of the Japan would increase their asset purchase scheme to restore health to the Japanese economy. The BOJ’s policy setting committee is scheduled to meet in early April and the analysts’ consensus is for an increase in bond purchases. The USD/JPY pair edged 0.2% higher to trade at 94.53 Yen, moving away from the recently struck 1-week trough of 93.53 Yen. Strong sentiment for a bearish Yen also helped to push the EUR/JPY pair higher by 0.2% to trade at 121.68 Yen.

Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.