EU Morning Report- Euro rebounds but still under pressure

The euro (EUR) edged higher to 1.2812 rebounding from a four-month low at 1.2641 against the US dollar. The single currency tumbled on Friday on concerns over Greece’s political uncertainty as well as growing instability in the Spanish banking sector. European leaders of G8 met during the weekend to discuss steps needed to fight Europe’s debt crisis and reaffirmed the importance that Greece remains in the eurozone. G8 leaders also focused on ways to stimulate eurozone growth but no detailed plans on how to resolve the problems were announced. But the single currency remains under pressure as investors are worried about a messy Greek default and exit from the euro ahead of a repeat election in June 17.

The US dollar (USD) stumbles against a basket of currencies as sentiment in the market stabilizes. Versus the safe haven Japanese yen (JPY), the greenback edged lower to a three-month low at 78.98 on Friday from 79.46. Investors are closely watching for any signs about an intervention by the Bank of Japan to stop the yen from rising further.

The British pound (GBP) slid to a two month low against the greenback on Friday as the UK economy remains vulnerable to the eurozone deepening problems. The pair rebounded from 1.5732 to trade at 1.5839 at the start of the new week. Sterling weakened following last week’s Bank of England inflation report which downgraded growth forecasts raising expectations about further quantitative easing. BoE’s Adam Posen said he is less optimistic about the UK economy than he was last month when he took his vote away for further asset purchases.

Please note that forex trading (OTC trading) involves substantial risk of loss, and may not be suitable for everyone. The information provided is based on data generated by third party investment research providers. easy-forex® does not assume any liability as to the accuracy of such information. This information shall be used for reference only and it is not binding on easy-forex. This is not an advertisement or a recommendation by easy-forex in engaging / binding you in any forex transactions.