November 27, 2012 / 3:30 PM / 5 years ago

FOREX-Euro falls from high as Greek deal relief disappears

* EU/IMF agree on new debt target for Greece
    * Euro falls from 1-month high as market skepticism on deal
    * Yen weak after Japan opposition leader calls for bolder

    By Julie Haviv
    NEW YORK, Nov 27 (Reuters) - The euro fell against the
dollar for the first time in five sessions on Tuesday,
retreating from a one-month high as a deal to rescue Greece was
offset by skepticism about the broader euro zone. 
    It fell to a session low of $1.2922 after data showed that
consumer confidence in the U.S. had risen to the highest in more
that four years.
    The euro zone single currency briefly pierced the key
psychological level of $1.30 on news of an agreement between
euro zone finance ministers and the International Monetary Fund
to reduce Greece's debt. The deal paves the way for the release
of Greece's urgently needed aid loans. 
   After 12 hours of talks, international lenders agreed on a
package of measures to reduce Greek debt by more than 40 billion
euros, projected to cut it to 124 percent of gross domestic
product by 2020. 
    "Going forward, the eyes of the financial world will closely
watch Athens to see if it can follow through and implement more
reforms to keep the bailout money flowing in the
months ahead," said Joe Manimbo, senior market analyst at
Western Union Business Solutions in Washington D.C.
    "Failure to do so would risk another flare-up in the Greek
debt crisis and open to door to renewed losses for the single
    The euro fell to a session low of $1.2928, well below
a one-month high of $1.3009 struck earlier during the Asian
session when the deal on Greek debt was agreed. It was last
trading at $1.2942, down 0.2 percent on the day.
    The dollar was also bolstered after Federal Reserve Bank of
Dallas President Richard Fisher, an arch-hawk, voiced concerns
about the U.S. Federal Reserve's quantitative easing program at
a conference in Berlin. 
    Analysts however said the Greek deal would provide a
temporary relief even as the worsening economic outlook for the
euro zone under relentless austerity measures would keep the
euro under pressure, especially against the dollar.
    "The initial reaction was positive for the euro as at first
people were relieved that an agreement had been reached but
looking at the details, sentiment has turned a bit sour," said 
Niels Christensen, FX strategist at Nordea.
    "The problem for Greece might be solved for the moment but
there are bigger problems like Spain, and with the dire growth
outlook for the euro zone, that will be very difficult to
    Christensen also said the euro's failure to move decisively
above $1.30 might have triggered some profit taking on long
euro/dollar positions. This could wind-back the single
currency's recent gains. Near-term support for the euro lay at
its 55-day moving average of $1.29187.
    In the past two weeks, the euro has garnered support from 
expectations for a deal on Greece and also due to optimism that
U.S. lawmakers would reach an agreement to avoid the so-called
"fiscal cliff" of tax increases and spending cuts due to take
effect at the beginning next year.
    Congress and the White House, however, remain at odds on a
deal, and the uncertainty that results typically boosts the
appeal of the safe-haven dollar.   

    Japan's opposition leader, Shinzo Abe, who is likely to
become the country's next prime minister after an election next
month, reiterated calls for bolder monetary and fiscal stimulus
to revive the country's economy. 
    That is expected to keep the yen under pressure, despite its
slight recovery on Tuesday. 
    The dollar was trading at 82.18 yen, up 0.2 percent
on the day, below a 7-1/2 month high of 82.82 yen hit last
    The Japanese currency has fallen sharply over the past
couple of weeks on mounting speculation that a new government
after Dec. 16 general elections will coerce the Bank of Japan
into easing monetary policy aggressively. 
    "We have seen a bit of a dip in dollar/yen this morning but
in the medium term we remain bullish. I would view dips as
opportunities to buy rather than something more permanent," said
Saeed Amen, quantitative FX strategist at Nomura. He expects
dollar/yen to be at around 85 yen by mid-2013.
    Data from the U.S. Commodity Futures Trading Commission
showed that currency speculators increased their bearish bets
against the yen in the week ended Nov. 20, a period when the
Japanese currency began its slide.
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