Euro Bounces as Traders Less Fearful of Cyprus

The euro bounced after fears of financial crisis in Cyprus abated to some degree. The currency advanced versus the US dollar and erased losses against the Japanese yen, but remained soft against the Great Britain pound.

Cyprus reopened its banks, but instituted severe measure to prevent a flight of capital from the system. Among such measures are limit of just €300 to withdraw locally. The government claimed that such measures are temporary in nature, but market participants are afraid that the limits will stay for a long time.

The bounce does not mean that woes for the euro have ended. But it looks like market participants are not ready to pursue a massive sell-off just yet, especially considering that the news does not look completely bad.

EUR/USD rose from 1.2779 to 1.2814 yesterday and traded near that level as of 00:20 GMT today. EUR/JPY traded at 120.70 on today’s session after touching the low of 119.73 yesterday. EUR/GBP edged down from 0.8443 to 0.8434 yesterday, where it stayed today.

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