February 11 Monday
The euro made a modest rebound against the dollar to 1.3410 from 1.3355 in Europe buoyed by weaker yen and the sharp decline of the British Pound.
Euro-yen rose 140 pips to 125.10 while euro-sterling rose 77 pips to 0.8537.
The price action of the euro versus the dollar can be described as consolidation between 1.3420 and 1.3350 as traders were cautious before the G20 meeting this week. At the meeting policy makers may raise concerns about the recent strength of the euro and the political risks in Spain, Italy and Cyprus’ bailout package.
Analysts say that the recent gains of the single currency were too fast and could lead to the so called “currency wars,” where countries deliberately lower their exchange rates to improve export competitiveness.
There are growing concerns as well for the financial aid package to Cyprus which will be among the major discussions in the G20 meeting in Brussels today.
Trading was fairly thin in the absence of the Chinese participants away for the Chinese Lunar New Year holidays.