Forex Market Update: Euro Trading Close to a Two-Week Low against the Dollar
The euro was trading close to its two-week low against the U.S. dollar in early trading on Monday amid rising political uncertainty in the euro zone. Meanwhile, the Japanese yen weakened against the dollar and the euro on Monday after rallying in the previous trading session.
After making a strong start this year, the euro has come under pressure amid rising political uncertainty in Spain and Italy, and concerns over Cyprus. Comments made by European Central Bank (ECB) President Mario Draghi are also weighing on the single currency.
Jane Foley, Senior Currency Strategist at Rabobank, told Reuters that the pace of euro’s gains in January made her feel uncomfortable as it was too far, too fast. Foley expects a period of consolidation over the next few months. However, she noted that if news from Cyprus, Spain and Italy is not good, the single currency could fall to $1.30.
On February 1, the euro rose to $1.3711, a multi-year high against the greenback. However, since then the single currency has fallen sharply. At last check on Monday, the euro was trading at around $1.3381, close to its two-week low of $1.3353, which it hit on Friday.
The yen, meanwhile, weakened against the dollar and the euro in early trading on Monday after the rally on Friday. The Japanese currency rose sharply on Friday after comments from Japan’s finance minister that the yen’s drop in recent weeks was steeper than intended. The Japanese finance minister’s comments suggested that the Bank of Japan (BOJ) may not implement additional monetary easing measures.
At last check on Monday, the euro was up 0.3% to 124.29 yen. The dollar rose 0.3% to 92.93 yen. Last week, the dollar had risen to a 33-month high against the yen.
The dollar index, which tracks the performance of the greenback against major currencies, was at 80.298, at last check.