The pair bottomed in the last day of the week at 1.4313, 620 pips below weekly highs reached on Wednesday at 1.4933 when it traded at the highest level in 17 months. The Euro was the worst performer during the week among majors.
In the Eurozone, Greece denied that it is considering leavening the euro. There were also speculations about a debt restructuration. “Pending the substantiation of this speculation, the euro will remain under pressure; but it will also hold off from a major run”, said Senior Currency Strategist from Daily FX, John Kicklighter.
A confirmation that Greece intends to leave, would send the euro sharply lower according to the Daily FX analyst. “Alternatively, putting to rest this speculation could lead to a temporary bounce that unwinds this morning’s losses. However, that doesn’t mean that it will recover any more ground than that; as traders now realize that the market is highly sensitive to concerns over the region’s financial stability”, Mr. Kicklighter added.
“The euro sell-off could continue on further position unwinding – especially if the correction in commodity prices runs further – and even lower levels in EUR/USD in the short term cannot be ruled”, analyst at the Danske Bank wrote in a report before the Greece news hit the wires. They concluded that in the short term the pair could continue to go lower if the indications that the global economy is slowing down spreads to equity markets, but they still see the underlying trend for a higher EUR/USD. “Hence, on the back of ECB hikes and easy monetary policy in the US, we will look for attractive levels to reposition for renewed upside”.