Euro and yen down

Published: 27 Mar at 9 AM Tags: Euro, Dollar,

The euro is trading at its lowest level against the dollar in four months as suspicions remain about the ‘Cyprus model’. However, fears of contagion in countries like Spain and Italy appear to be subsiding. The yen has also come under pressure as analysts predict that an upcoming policy meeting at the Bank of Japan under new governor Haruhiko Kuroda will result in an increase in bond buying.

Head of Eurogroup, Jeroen Dijsselbloem, may have backtracked from his initial statement that the situation in Cyprus could become the model for future bailouts in the eurozone, but his comments have troubled traders. Both the dollar and the euro have gained 0.2 per cent against the yen.

The US currency is currently trading at 94.53 yen, and the single currency is worth 121.68 yen. It is expected that the euro will stabilise by the Easter break. Shares on Wall Street have been boosted by a rise in home prices that suggest the US economy is beginning to recover from the global financial crisis.

Commodity currencies are also doing well with the Canadian dollar gaining 0.5 per cent on Tuesday and the Australian dollar remaining firm at $1.0482.

However, it still remains to be seen how the situation in Cyprus will impact the markets as traders watch to see if the model is transferred to other embattled nations within the eurozone.