All eyes on euro-zone meeting today
- Last Updated on 20 February 2012
- Hits: 18
Investor optimism that Greece could finally receive a bailout package today resulted in modest risk taking during Friday's trading session. The news led to the euro seeing gains against its safe-haven currency rivals, including the US dollar and Japanese yen. The EUR/USD was able to close out the week at 1.3143 after dropping below the psychologically significant 1.3000 level and hitting a three-week low. The EUR/JPY closed out Friday's session at 104.57, up over 100 pips from the day's low of 103.45.
While most analysts are convinced that a Greek bailout package will be agreed to today when euro-zone finance ministers meet, how the bailout will impact the euro is still unknown. First of all, some euro-zone countries are still not convinced that Greece will be able to implement the harsh austerity measures it pledged to in return for the bailout. Secondly, it is still unclear if the 130 billion euro rescue package will be enough for Greece to avoid defaulting on its debt.
These uncertainties may limit euro gains today, providing the agreement on the bailout is even reached. Traders should note that the euro-zone is still in a very fragile state, and any additional negative news out of the region could result in the common currency tumbling. That being said, short-term euro gains may occur today if investors see the meeting as positive and shift their funds to riskier assets.