Euro remains pressurised despite rebounding from four month low

The euro continued to climb from its four-month suffered last week, but investors remained wary over the financial crisis in Spain and Greece, drawing little comfort from G8’s vow to fight the debt crisis in the eurozone.

The single currency moved up after speculators placed a record number of bets against it, revealed data from a US financial watchdog published at the end of last week. Bank of Tokyo-Mitsubishi’s chief analyst Minori Uchida said that we are moving into a consolidation phase with the euro and it will be some time before it is known if Greece will remain in the euro as the country’s elections are a few weeks away.

On Friday, the US Commodity Futures Trading Commission said that speculators’ short euro positions increased to 173,869 contracts, a record high, while their bets on the dollar versus other currencies also climbed to the highest level seen since mid-2008.

The euro was last at $1.2799, roughly 0.15 per cent above what it closed at in New York on Friday, and around 1.2 per cent above its four-month low of $1.2642 that it suffered earlier on Friday. State Street head of forex Kimihiko Tomita said that this is a result of short-covering does not have much to do with the euro’s economic fundamentals.