Forex - EUR/JPY drops on cloudy Greek financial outlook

Published 11/12/2012, 09:35 PM
Updated 11/12/2012, 09:37 PM
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Investing.com - The euro fell against the yen on Monday after European policymakers gave Greece a two-year extension to push through austerity measures but held off on disbursing bailout money.

In Asian trading on Tuesday, EUR/JPY hit 100.69, down 0.35% and up from a low of 100.66 and off a high of 101.20.

The pair sought to test support at 100.43, Friday's low, and resistance at 101.20, the earlier high.

Greece recently passed an austere budget for next year and also pushed through politically unpopular budget cuts and tax hikes as required to tap a EUR31.5 billion tranche of financial aid.

Eurozone finance ministers met earlier to review the details of Greece's progress but have yet to free up the money for Athens, which sent investors snapping up safe-haven yen positions, which came at the expense of the euro.

Eurozone finance ministers have given Athens two years to meet austerity targets though the country is quickly running out of funding and will need a tranche of aid soon.

Eurozone policymakers are scheduled to meet again to discuss Greece's finances on Nov. 20.

Greece will not default until then as it can roll over debts in the meantime.

While approving the tranche of aid will end shorter-term solvency issues for Greece, the country and creditors must still agree on ways to lower longer-term debt burdens.

The yen saw further demand on growing fears the U.S. may fall into an avoidable recession next year.

At the end of this year, the Bush-era tax cuts and other tax benefits expire at the same time pre-programmed cuts to government spending are scheduled to take effect, a combination known as a fiscal cliff that could send the country into recession next year if left unaddressed by Congress.

Lawmakers have expressed confidence that they'll avoid partisan bickering and cut a deal, but until an announcement hits the wire, investors will remain wary.

Elsewhere, the euro was down against the pound and down against the Canadian dollar, with EUR/GBP trading down 0.16% at 0.7994 and EUR/CAD trading down 0.17% at 1.2688.

Later Tuesday in Europe, the ZEW Centre for Economic Research will release its closely watched report on German economic sentiment, as well as data on sentiment in the wider eurozone.






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