EUR/USD falls slightly, as Greek debt concerns continue to weigh


© Reuters.  The dollar appreciated slightly against the euro on Monday to halt a mild slump© Reuters. The dollar appreciated slightly against the euro on Monday to halt a mild slump — The euro fell slightly against the dollar on Monday halting a limited rally, amid continued uncertainty on a potential default by Greece on its sovereign debt.

EUR/USD dipped 0.0063 or 0.58% in U.S. afternoon trading to 1.0744 after moving above the 1.08 level last Friday when it appreciated nearly 2% for the week. The pair fell to a session-low of 1.0714 in U.S. morning trading before wavering throughout the day.

Since the start of March, EUR/USD has rarely moved outside of a range between 1.05 and 1.10.

Officials in Athens on Monday reportedly issued a decree to local governments forcing them to transfer all cash balances to the Greek Central Bank, in advance of a €770 million obligation due to the International Monetary Fund in May. The effort could raise about €2 billion, according to multiple reports.

The report came in the wake of a renewed effort by European Central Bank president Mario Draghi over the weekend to soothe tensions with Greece. Speaking at a conference in Washington on Saturday involving the world’s top finance ministers, Draghi rejected speculation that Greece may be forced to abandon the euro. Last week, the Financial Times reported that Greece could be exploring a contingency plan on how to proceed if it fails to receive critical aid from its euro zone creditors, which is deemed necessary for it to stave off bankruptcy. Officials in Athens promptly denied the report.

Elsewhere, comments from monetary policymakers on both sides of the Atlantic had little impact on the currency pair. In Frankfurt, Draghi appeared optimistic on the early stages of the ECB’s €1.1 trillion quantitative easing program in remarks published on Monday. After a review of a swath of policy measures and balance sheets of member banks, Draghi said, “growth projections as well as inflation expectations have been revised upward and confidence overall has been increased.” The remarks were published in the Introduction to the ECB’s annual report.

In New York, meanwhile, Federal Reserve governor William Dudley appeared to remain dovish on the timing of a potential interest-rate hike, after a batch of soft U.S. economic data in recent weeks has fueled speculation of a delay. Speaking alongside Bank of Canada governor Stephen Poloz at an address in New York, Dudley said, “hopefully the data supports a decision to lift off later this year.” The Fed has indicated that it could raise rates during its Federal Open Market Committee meeting in June.

USD/CAD inched up 0.0006 or 0.05% to 1.223.

In Asia, currency traders reacted to the People’s Bank of China’s decision over the weekend to lower the reserve requirement ratio for Chinese banks from 19.5 to 18.5%. The stimulus measure could release about 1 trillion yuan in liquidity.

USA/JPY gained 0.04 or 0.03% to 119.23.

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