Euro down as traders focus on Cyprus impact

The euro is currently at a four-month low against the US dollar as fears persist about the health of the single currency following a bailout deal with Cyprus. The worry is that bond holders and bank depositors could end up paying the price for other rescue deals within the bloc.

Eurogroup head, Jeroen Dijsselbloem, originally said that the Cyprus model could be used to resolve other banking crises within the eurozone, although he has since backtracked claiming that Cyprus is in fact a unique case.

Some analysts are predicting that the euro will stabilise ahead of the Easter holidays and that there is currently no sign that the problems in Cyprus have spread to Italy and Spain.

The yen has also fallen on expectations that the Bank of Japan will initiate further bond buying. The euro is up 0.2 per cent against the Japanese currency to 121.68 yen. According to reports a policy review meeting set to take place at the beginning of next month under Haruhiko Kuroda, the new Governor, will result in an expansion of bond purchases.

The dollar has also risen against the yen to 94.53 yen, a gain of 0.2 per cent. A positive risk sentiment has helped commodity currencies like the Australian dollar hold firm. The Aussie is currently trading at $1.0482.