The Euro was seen retreating against dollar, giving initial gains due to one of the deals to help Greece as the doubt about the bigger euro zone came back to put weight on the currency. International lenders reached an agreement on a newer debt target to be given to the country that would cut down the debt of Greece by a good 40 billion euros, reducing it by 124% of GDP by the year 2020, in one of the deals that shows the path for releasing the urgently-needed fund to keep the economy of Greece flat.
The Euro came down to a low of $1.29350 on EBS trading platform, pretty below the 1-month high record of $1.3010 hit earlier during Asian session, which was when the deal about Greece was agreed. It was trading at last at $1.2955, down 0.2% on the particular day. The dollar also got hit after Richard Fisher, the President of Federal Reserve Bank, talked about concerns about the program of quantitative easing by U.S. Federal Reserve at one of the conferences in Berlin. The comments of Fisher helped the U.S. currency index recoup the losses. The index last traded at 80.286, off a 4-week down of 80.022 hit earlier during a session when euro was in a firmer position.
Analysts stated that the deal would offer a relief for the time being and the bad economic outlook for euro zone, which is under relentless austerity steps, might continue to put pressure on euro, more important against dollar. Niels Christensen, one of the FX strategists at Nordea said that the reaction at the beginning was more positive for Euro, as people initially felt a relief about reaching an agreement, but after learning about the details, the overall sentiment has once again turned sour.
He added that the Greek problems might be over temporarily, but bigger problems are in the form of Spain, plus the dire outlook of growth for the region, it would get very complicated to solve. He also stated that the failure of euro to go ahead of $1.30 mark might also have triggered little gains on long positions of euro/dollar. This could very easily push back the recent gains of the currency. The near-term aid for the European currency lay at 55-day moving average of around $1.29187. In last two weeks, the euro gained around 2% against the dollar.