The euro posted gains against other majors this week as concerns about the European
The main drive for the euro this week was the economic data from the US. Attention of traders turned from Europe to America, and what they’ve seen wasn’t pleasant. Meanwhile, the 17-nation currency regained its strength on the back of the US woes.
The news from Europe also gave some support for the euro. Greece convinced the European Union official that the nation will perform necessary budget curs and received another portion of the bailout that was planned last year.
But the story of the European debt is far from over. People in Greece are protesting against the cuts and Moody’s Investor Service downgraded Greece’s local and foreign currency bond ratings to Caa1 from B1 and assigned a negative outlook to the ratings. The agency explained its decision by two factors:
1. The increased risk that Greece will fail to stabilise its debt position, without a debt restructuring, in light of (1) the
ever-increasingscale of the implementation challenges facing the government, (2) the country’s highly uncertain growth prospects and (3) a track record of underperformance against budget consolidation targets.
2. The increased likelihood that Greece’s supporters (the IMF, ECB and the EU Commission, together known as the “Troika”) will, at some point in the future, require the participation of private creditors in a debt restructuring as a precondition for funding support.
The fundamental reports from the Eurozone weren’t particularly positive either. The euro has many reasons to go down and the next week may be not as good for the currency as this week.
EUR/USD rose to 1.4633 from 1.4321 this week after posting the weekly low of 1.4256. EUR/JPY rose to 117.46 from 115.62. EUR/CHF advanced from 1.2155 to 1.2199, posting the first weekly gain after five consecutive weeks of losses.
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