LONDON — The euro rose on Monday, but its value was vulnerable to political and fiscal uncertainty in the euro zone and growing unease among some European leaders worried about currency’s recent gains.
The Group of 7 nations were considering issuing a statement this week that reaffirmed their commitment to “market-determined” exchange rates in response to heating rhetoric about a currency war, two Group of 20 officials said on Monday.
Some analysts said the euro could edge lower before a meeting of euro zone finance ministers later Monday and a G-20 meeting later in the week, given tensions over whether some countries are deliberately trying to weaken their currencies to improve export competitiveness.
Pierre Moscovici, the French finance minister, said on Monday that euro zone countries need closer cooperation on exchange rate policy and the bloc’s finance ministers would discuss the issue when they meet.
The euro recovered from a session low of $1.3358, which was close to a two-week low, at around $1.3385. Morgan Stanley strategists said the euro could pull back toward $1.3260, its 50-day moving average.
Against the yen, the euro rose 1 percent to 125.39 yen, pulling away from Friday’s one-week low of 123.43, but still some way off the 34-month high of 127.71 yen hit on Feb. 6.
“While the speed of the euro recovery was probably overdone, this correction down is also likely running out of steam,” said Ulrich Leuchtmann, head of foreign exchange research at Commerzbank. “There are however risks with the Italian elections (and) Cyprus and we could see some pullback today” with the finance ministers’ meeting.
Concerns about the terms of a bailout for Cyprus, which will be high on the finance ministers’ agenda, would cap the euro’s gains, analysts said.
The euro sold off last week after Mario Draghi, the European Central Bank president, kept alive expectations of rate cuts and said the bank would monitor the economic impact of the strengthening currency.
The euro had gained around 5.5 percent against the dollar since the beginning of January to its peak of $1.3711 on Feb. 1. Since then. it has shed about 2.5 percent.
Much of Asia was shut for the Lunar New Year holidays, keeping volumes on the lower side.
Article source: http://www.nytimes.com/2013/02/12/business/global/euro-in-the-spotlight-ahead-of-meetings.html?partner=rss&emc=rss