Forex focus: euro has experts sitting on the fence

What are the chances of the euro reaching €1.42 again any time soon? We asked the experts

It was only a few weeks ago that sterling peaked at a seven-year high against the euro at €1.42. Since then the single currency has regained around six cents.

That might not sound much, but if you were planning on spending £100,000 you’d be €6,000 worse off and if you received £1,000 a month you’d have €60 less to spend.

So what are the chances of the euro reaching €1.42 again any time soon? A straw poll among currency specialists showed opinion was divided.

Among those in the positive camp, is Charles Murray of FC Exchange ( fcexchange.co.uk ), who said: “In the short-term 1.40-plus is still a strong possibility, as Greece is dangerously close to running out of money 20 April touted as a likely date for this to happen.”

Alistair Cotton from Currencies Direct ( currenciesdirect.com ) also expects the rate “to move back towards 1.40 over the coming months”.

Caxton FX’s ( caxtonfx.com ) Nicholas Ebisch is even more upbeat: “There is scope for the rate to return to its peak of 1.4250 soon. The predictions for the euro over the next three months are that there will be steady euro weakness.”

Trevor Charsley at AFEX ( afex.com ) agreed, saying: “On the premise that we get a similar government to the incumbents we do see GBP/EUR testing 1.4250 after the election. The next target after this is 1.4500.”

Angus Campbell from FxPro ( fxpro.co.uk ) doesn’t believe there is much that can help the euro, saying, “It is hard to see the euro regaining too much of the ground it lost in the first quarter of the year despite its recent best efforts to do so.”

On the other side of the euro fence, among the pessimists is Chris Towner of HiFX ( hifx.co.uk ). He said: “We would expect the euro to strengthen back again towards €1.30 in the months ahead.”

Josh Ferry Woodard is also in this camp, saying, “As long as Greek officials manage to keep the Hellenic nation inside the eurozone then we could see GBP/EUR weaken towards 1.32-1.34 over the next three months.”

Those sitting on the fence include Chris Saint of Hargreaves Lansdown (LSE: HL.L – news) ( hl.co.uk ) is reluctant to commit while the UK fights its closest general election in decades. He said: “Sterling’s 10pc rise since the start of 2015 to highs of €1.4250 looked to be a little too far too fast and I don’t see it reaching these heights again before we know the outcome of the election. However, the euro’s longer-term weakening trend looks to be intact and I suspect sterling could re-test these highs later in the year, particularly if ‘Grexit’ fears linger as UK political risks fade.”

Charles Purdy of Smart Currency Exchange ( smartcurrencyexchange.com ) is also hedging his bets: “The euro is unlikely to show major strengthening in the short term but also unlikely to see further significant weakness, especially as other countries such as the UK and the US will be very reluctant to see their exporters unduly penalised.”

The huge question mark hovering over the direction of the pound is the UK election in May.

David Kerns of moneycorp ( moneycorp.com ) said: “The GBP/EUR rate appears to have peaked in the short term at €1.42 as sterling itself has come under selling pressure following some disappointing economic data releases at home.

“As the general election looms ever closer that too can have a detrimental impact on the pound as investors shy away from the UK until the leader of the next parliament is known.”

A hung parliament of some form or another looks likely at the moment and none of the outcomes is completely positive. A slim Tory win, while generally encouraging for the pound, has the drawback that David Cameron’s promised referendum on the EU will depress sterling.

However, the biggest threat to the eurozone is the risk that the Greek debt crisis will mean it exits the currency bloc. As negotiations between the Greek government and its creditors heat up and deadlines get nearer, starting this week, the euro is likely to start wobbling.

“The main danger from a ‘Grexit’ is that it sets precedence for departure from the euro,” said Charsley. “Something that Mario Draghi the ECB governor has said is irreversible. If he is proven to be wrong, this could be the beginning of the end for the euro.”

And that’s not all. The eurozone is still struggling with too many out of work, particularly in the southern states, low or no inflation and quantitative easing, which all combine to keep downward pressure on the currency.

But, from a self-interested point of view, a continuing weak euro is going to be welcomed by businesses and expats getting funds in pounds.

Euro Extends Decline On Greece Uncertainty, Weak Eurozone Data

The euro continued its slide against the other major currencies in European deals on Tuesday, after Eurozone inflation fell for the fourth month in a row in March, whereas jobless rate worsened more-than-forecast in February. Market participants are also worried about Greece debt talks, as the country will run out of money in three weeks unless it receive bailout finding.

Flash estimate from Eurostat showed that Eurozone inflation remained negative, with an annual decline of 0.1 percent in March. The index matched economists expectation.

The Eurozone unemployment rate worsened more-than-forecast to 11.3 percent in February, data from the statistical office of the European Union showed. Economists were forecasting a reading of 11.2 percent.

The currency has been in a negative territory due to lack of progress in talks between Greece and its creditors, in order to reach an agreement on reforms to release financial aid. Athens risks default on its financial obligations since it would run out of money by April 20.

The euro was lower against its major opponents, except the franc, on Monday. The EUR/USD pair fell by 0.5 percent yesterday, hurt by continued standoff between Greece and its creditors.

The single currency declined to 1.0712 against the U.S. dollar, its lowest since March 20. Continuation of the euro’s downtrend may lead it to support around the 1.05 zone. The pair ended yesterday’s trading at 1.0831.

The euro declined by 0.8 percent to hit an 8-day low of 0.7254 against the Sterling. If the euro extends slide, it may find support around the 0.72 mark. At Monday’s close, the pair was valued at 0.7312.

The pound received support after data showed that U.K. economy grew more than the prior estimate in the fourth quarter.

Gross domestic product grew 0.6 percent sequentially in the fourth quarter, revised up from 0.5 percent published on February 26, data from the Office for National Statistics showed.

Reversing from an early 4-day high of 130.25 against the yen, the euro slipped to an 11-day low of 128.64. The next possible downside target for the euro-yen pair may be located around the 128.00 area. The euro-yen pair was worth 130.03 when it ended Monday’s trading.

Data from the Ministry of Land, Infrastructure, Transport and Tourism showed that Japanese housing starts declined at a slower than expected pace in February.

Housing starts dropped 3.1 percent in February from last year, slower than January’s 13 percent decline and an expected decrease of 7 percent.

The 19-nation currency pulled back from an early high of 1.0484 against the Swiss franc, and edged down to 1.0445 in European trading. The pair was trading at 1.0476 at Monday’s close. Further weakness is likely to take the euro to a support near the 1.00 mark.

The euro declined to 4-day lows of 1.3652 against the loonie and 1.4346 against the kiwi, off early high of 1.3748 and a 5-day high of 1.4458, respectively. The euro is poised to find downside target around 1.36 against the loonie and 1.42 against the kiwi.

The euro moved away from an early session’s high of 1.4180 against the aussie, edging down to 1.4093. Next key support for the euro may be found around the 1.40 mark.

Looking ahead, Canada GDP for January, U.S. S&P Case Shiller home price index for January, Chicago PMI for March and U.S. consumer confidence index for March are set to be published in the New York session.

At 7:55 am ET, U.S. Federal Reserve Bank of Richmond President Jeffrey Lacker is expected to speak on Economic outlook in Richmond.

Danièle Nouy, chair of the ECB Supervisory Board, will deliver a speech before the European Parliament’s Committee on Economic and Monetary Affairs on Brussels at 9:00 am ET. At the same time, U.S. Federal Reserve Bank of Cleveland President Loretta Mester moderates a policy session at a conference in Stone Mountain, Georgia.

At 3:00 pm ET, U.S. Federal Reserve Bank of Kansas City President Esther George is expected to speak on the U.S. economy in New York.

by RTT Staff Writer

For comments and feedback: [email protected]

Business News

Euro, Aussie Dollar May Rise as Yen Falls on Greece Funding Deal

DailyFX.com –

Talking Points:

  • Euro to Look Past CPI Data, Focus on Greece Debt Negotiations
  • Greek Deal May Boost Aussie and NZ Dollar, Boost Japanese Yen
  • Access Real-Time FX Markets Analysis with DailyFX on Demand

The preliminary set of March Eurozone CPI figures headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to register at 0.3 percent, rising for a second consecutive month. The outcome seems unlikely to offer much by way of lasting Euro volatility however considering the results’ limited impact on the near-term ECB policy outlook.

Rather, the spotlight is likely to remain on Greece. Athens submitted a list of proposed reforms on Friday. The markets now await the verdict on whether the “institutions” representing Greece’s creditors – the EU, the ECB and the IMF – will approve it and unlock the next round of bailout funding. Investors fear that if external funding is not secured, a cash crunch and subsequent default may lead to the country’s exit from the Eurozone.

On balance, both sides of the negotiation are interested in a deal. Prime Minister Alexis Tsipras and company surely realize that a disorderly redenomination will probably compound the country’s economic woes and cost them their jobs. Meanwhile, EU and IMF officials no doubt prefer to avoid a “Grexit” scenario for fear of the precedent it may set. On balance, this means that some kind of accommodation is more likely than not.

An accord that prevents a default and keeps Greece in the currency bloc is likely to prove supportive for the single currency. Follow-through may be somewhat limited however as on-going ECB QE casts a dark cloud over the near-term outlook. It may likewise boost overall risk appetite, sending the sentiment-geared Australian and New Zealand Dollars upward while punishing the safe-haven Japanese Yen. Needless to say, failing to reach a deal stands to produce the opposite response.

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Asia Session

European Session

Critical Levels

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Euro Bears at Risk on Sticky CPI- Outlook Remains Bearish Below 1.10

DailyFX.com –

Euro-Zone Consumer Price Index (CPI) to Contract at Slower Pace.

Core Inflation to Hold Steady at Annualized 07% for Second-Month.

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Trading the News: Euro-Zone Consumer Price Index (CPI)

The Euro-Zone’s Consumer Price Index (CPI) may dampen the bearish sentiment surrounding the Euro and spur a short-term rebound in EUR/USD should the report highlight sticky price growth across the monetary union.

What’s Expected:

View gallery

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EUR/USD CPI

Click Here for the DailyFX Calendar

Why Is This Event Important:

Indeed, signs of stabilizing price pressures may encourage the European Central Bank (ECB) to soften its dovish outlook for monetary policy, and President Mario Draghi may talk down expectations for a further expansion in the easing cycle as the region gets on a more sustainable path.

Expectations: Bullish Argument/Scenario

The pickup in business sentiment along with the expansion in private-sector consumption may generate sticky price growth in the euro-area, and a positive development may heighten the appeal of the single currency as market participants scale back bets for additional monetary support.

Risk: Bearish Argument/Scenario

However, falling input prices paired with the ongoing contraction in private-sector lending may encourage European firms to further discount consumer prices, and a dismal inflation print may trigger a short-term decline in the exchange rate as the ECB keeps the door open to implement more non-standard measures.

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How To Trade This Event Risk(Video)

Bullish EUR Trade: Headline & Core Inflation Exceed Market Expectations

  • Need green, five-minute candle following the release to consider a long EUR/USD trade
  • If market reaction favors a bullish Euro trade, buy EUR/USD with two separate position
  • Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
  • Move stop to entry on remaining position once initial target is hit, set reasonable limit

Bearish EUR Trade: Euro-Zone CPI Highlights Greater Threat for Deflation

  • Need red, five-minute candle to favor a short EUR/USD trade
  • Implement same setup as the bullish Euro trade, just in opposite direction

Read More:

Scalp Webinar: USD Defends Support Slope- Bulls at Risk Ahead of NFP

AUD/USD Retail FX Flips Net-Long; March Low (0.7559) on Radar

Potential Price Targets For The Release

EUR/USD Daily Chart

Chart – Created Using FXCM Marketscope 2.0

  • String of failed attempts to close above the 1.1000 region may highlight a near-term topping process in EUR/USD especially as the RSI struggles to retain the bullish momentum from earlier this month.
  • Interim Resistance: 1.0970 (38.2% expansion) to 1.0990 (50% retracement)
  • Interim Support: 1.0620 (61.8% expansion) to 1.0640 (38.2% expansion)

Impact that the Euro-Zone CPI report has had on EUR during the last release

January 2015 Euro-Zone Consumer Price Index (CPI)

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EUR/USD Chart

The Euro-Zone’s Consumer Price Index (CPI) slipped at an annual pace of 0.3% in February after contracting 0.6% the month prior, while the core rate of inflation held steady at an annualized 0.6% for the second consecutive month. Despite the ongoing slack in the euro-area, the European Central Bank’s (ECB) quantitative easing (QE) program may continue to shore up the ailing economy as the President Mario Draghi adopts an improved outlook for the monetary union. The initial reaction in the Euro was short-lived as EUR/USD struggled to hold above the 1.1225 region, and the single currency struggled to hold its ground throughout the North American trade as the pair ended the day at 1.1181.

— Written by David Song, Currency Analyst and Shuyang Ren

To contact David, e-mail [email protected] Follow me on Twitter at @DavidJSong.

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Euro to Look Past German CPI, Focus on Greece Funding Woes

DailyFX.com –

Talking Points:

  • Euro to Look Beyond German CPI, Focus on Greece Developments
  • Aussie, NZ Dollars Drop Amid Commodities-Driven Risk Aversion
  • Access Real-Time FX Markets Analysis with DailyFX on Demand

The preliminary set of March’s German CPI figures headlines the economic calendar in European hours. The benchmark year-on-year inflation rate is expected to register at 0.3 percent, rising for a second consecutive month. The outcome seems unlikely to offer much by way of lasting Euro volatility however considering the results’ limited impact on the near-term ECB policy outlook.

Rather, the single currency ought to be far more interested in Greece-related news flow. The government of Prime Minister Alexis Tsipras submitted a list of proposed reforms that it hopes will unlock the next round of bailout funding on Friday. The so-called “institutions” representing Greece’s creditors – the EU, the ECB and the IMF – began to evaluate the plan over the weekend, with a decision expected later today. Athens faces €5.8 billion in maturing debt this month in addition to the on-going expense of running the country.

Investors fear that if external funding is not secured, a cash crunch and subsequent default may lead to the country’s exit from the Eurozone. Such an outcome would be unprecedented, carrying with as-yet unknown implications for the financial markets at large. Avoiding that trajectory with an accord that keeps Greece within the currency bloc is likely to prove supportive for risk appetite, boosting high-yielding FX and weighing on the safe-haven Japanese Yen. Needless to say, failing to reach a deal stands to produce the opposite response.

Both sides of the negotiation are ultimately interested in a deal. Greek officials surely realize that sticking to their campaign promise of ending austerity at the cost of disorderly redenomination will probably compound the country’s economic woes and likely cost them their jobs. Meanwhile, EU and IMF officials no doubt prefer to avoid a “Grexit” scenario for fear of the precedent it may establish, particularly in larger countries with strong anti-austerity movements such as Spain. On balance, this means that some kind of accommodation is probably more likely than not.

The Australian and New Zealand Dollars underperformed in otherwise quiet overnight trade, falling as much as 0.4 percent each against their leading counterparts. The decline tracked a move lower on Australia’s benchmark S&P/ASX 200 stock index, pointing to risk aversion as the catalyst driving selling in the sentiment-linked currencies. The dour mood seems to have originated in softer oil and iron ore prices. Indeed, shares in the energy and materials sectors proved weakest on the session.

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Asia Session

European Session

Critical Levels

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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Currencies: Euro down against dollar, yen after staging rally

The euro fell against the dollar and the yen in Asia trade Tuesday, with some traders adjusting positions after the currency staged a rally overnight.

The euro EURUSD, +0.31%  was at $ 1.0920 from $ 1.0946 late Monday in New York. That compares with a high of $ 1.0972 overnight but still below $ 1.1037 soon after the outcome of the Federal Open Market Committee last week.

The common currency EURJPY, +0.13%  was also at ¥130.53 from ¥131.07.

“After rising for no particular reason yesterday, (the euro) inevitably met with selling as it came closer to $ 1.10,” said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow. Also investors are showing less of an appetite to buy the euro around ¥131, he added.

The single currency extended its recent rebound overnight after the Federal Reserve’s policy statement indicated it intends to proceed cautiously on interest-rate rises, much less aggressive than many had expected.

“It is natural to see a rebound to this extent” after the rapid pace of decline in recent sessions, said Sakai.

WSJ market wrap: March 23, 2015

U.S. stocks edged higher Monday, extending last week’s gains, though the Nasdaq Composite pulled back from its 15-year high. Tenet Healthcare agreed to a deal that will hand it control of United Surgical Partners International.

Federal Reserve Vice-Chairman Stanley Fischer said Monday the U.S. central bank remains on track to raise short-term rates this year.

Fischer said once rates begin to rise, they could easily move “up and down” depending on how the economy performs.

Over the near term, the euro may get a boost from short covering triggered by possible strength in eurozone PMI data later today, said Takuya Kawabata, analyst at Gaitame.Com Research Institute.

“If the pair manages to surpass the $ 1.10-mark, further gains are possible,” said Kawabata, who expects the pair to move in a $ 1.080-$ 1.1070 range Tuesday. But if U.S. inflation data also scheduled later today shows a stronger-than-expected pace of inflation, that may reignite hopes for an early U.S. rate increase that would bring about a return to the dollar buying.

Elsewhere, the Australian dollar AUDJPY, -0.28%  briefly hit as low as ¥93.85 after weak Chinese manufacturing activity data. The Aussie was most recently at ¥93.97.

The preliminary gauge of Chinese manufacturing activity by HSBC Holdings PLC fell to 49.2 in March, from 50.7 in February. A figure below 50 indicates contraction.

The WSJ Dollar Index BUXX, -0.17% a measure of the dollar against a basket of major currencies, was up 0.11% at 86.86.

Euro Down Against Dollar, Yen After Staging Rally


By Hiroyuki Kachi

The euro fell against the dollar and the yen in Asia trade Tuesday, with some traders adjusting positions after the currency staged a rally overnight.

Around 0450 GMT, the euro was at $ 1.0920 from $ 1.0946 late Monday in New York. That compares with a high of $ 1.0972 overnight but still below $ 1.1037 soon after the outcome of the Federal Open Market Committee last week.

The common currency was also at Y130.68 from Y131.07.

“After rising for no particular reason yesterday, (the euro) inevitably met with selling as it came closer to $ 1.10,” said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow. Also investors are showing less of an appetite to buy the euro around Y131, he said added.

The single currency extended its recent rebound overnight after the Federal Reserve’s policy statement indicated it intends to proceed cautiously on interest-rate rises, much less aggressive than many had expected.

“It is natural to see a rebound to this extent” after the rapid pace of decline in recent sessions, said Mr. Sakai.

Federal Reserve Vice-Chairman Stanley Fischer said Monday the U.S. central bank remains on track to raise short-term rates this year.

Mr. Fischer said once rates begin to rise, they could easily move “up and down” depending on how the economy performs.

Over the near term, the euro may get a boost from short covering triggered by possible strength in eurozone PMI data later today, said Takuya Kawabata, analyst at Gaitame.Com Research Institute.

“If the pair manages to surpass the $ 1.10-mark, further gains are possible,” said Mr. Kawabata, who expects the pair to move in a $ 1.080-$ 1.1070 range Tuesday. But if U.S. inflation data also scheduled later today shows a stronger-than- expected pace of inflation, that may reignite hopes for an early U.S. rate increase that would bring about a return to the dollar buying.

Elsewhere, the Australian dollar briefly hit as low as Y93.85 after weak Chinese manufacturing activity data. The Aussie then stabilized at Y94.10 later in the session.

The preliminary gauge of Chinese manufacturing activity by HSBC Holdings PLC fell to 49.2 in March, from 50.7 in February. A figure below 50 indicates contraction.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.11% at 86.86.

 Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT                             Latest       Previous   %Chg    Daily    Daily   %Chg Dollar Rates                               Close            High      Low  12/31  USD/JPY Japan           119.70-71      119.72-73  -0.01   119.85   119.59  -0.01 EUR/USD Euro            1.0920-23      1.0945-48  -0.23   1.0968   1.0905  -9.73 GBP/USD U.K.            1.4940-45      1.4951-56  -0.07   1.4976   1.4921  -4.08 USD/CHF Switzerland     0.9679-83      0.9659-63  +0.21   0.9696   0.9646  -2.64 USD/CAD Canada          1.2528-33      1.2520-25  +0.06   1.2549   1.2504  +7.82 AUD/USD Australia       0.7856-60      0.7878-82  -0.28   0.7903   0.7839  -3.83 NZD/USD New Zealand     0.7649-55      0.7650-56  -0.01   0.7675   0.7628  -1.83  Euro Rate  EUR/JPY Japan           130.70-74      131.03-07  -0.25   131.20   130.62  -9.81 Source: ICAP PLC  

Write to Hiroyuki Kachi at [email protected]

    (END) Dow Jones Newswires   03-24-150138ET   Copyright (c) 2015 Dow Jones & Company, Inc. 




Weaker euro works in ECB's favour, but for how long?

Frankfurt (AFP) – The weaker euro, which could approach parity with the US dollar, is making the European Central Bank’s task of kickstarting the eurozone economy easier.

But the feel-good effects could turn sour if the euro’s decline in value becomes too pronounced too quickly, analysts said.

Officially, the ECB has no exchange rate target. But by making eurozone goods cheaper to export and pushing up prices of imports, the weaker euro is positive for the single currency area’s economy.

“In the current context, pushing down the euro is probably the only means the ECB has for pushing up inflation,” Natixis economist Sylvain Broyer told AFP.

The ECB has rolled out a series of unprecedented measures in recent years to try to prevent the euro area from slipping into deflation, a dangerous downward spiral of falling prices that is difficult to break once it has set in.

But the euro has fallen by nearly 20 percent against the dollar in the past six months and central banks start to feel uncomfortable when changes in the exchange rate are too rapid and too volatile.

For the moment, the ECB does not appear to be alarmed.

President Mario Draghi recently estimated that the euro’s decline should contribute “significantly” in bringing area-wide inflation back up towards the ECB’s target of just below 2.0 percent.

In February, consumer prices in the 19-country bloc fell by 0.3 percent.

But in a scenario drawn up by the ECB’s team of economists, an excessively weak euro could push eurozone inflation back above the 2.0-percent target by 2017. Such a scenario is all the more realistic because it was calculated using an exchange rate of $ 1.04 per euro.

– Caught off guard –

The extent of the euro’s recent decline appears to have caught the ECB off guard: its most recent official forecasts were compiled using an average exchange rate of $ 1.14 this year and $ 1.13 in 2016 and 2017.

Nevertheless, the euro could fall even further against the dollar as a result of the ECB’s policy of quantitative easing, or widescale bond purchases, said Commerzbank economist Joerg Kraemer.

At the beginning of this month, the ECB embarked on a massive 1.14-trillion-euro bond purchase programme, at a rate of 60 billion euros per month until September 2016. The idea is to pump liquidity into the financial system.

“The debt purchase programme is essentially a programme of currency devaluation,” said Kraemer.

By purchasing eurozone sovereign bonds en masse, the securities become less attractive for investors in other regions, who divert their money to other countries, driving down the euro.

The mere speculation that such a QE programme might be in the offing set the euro on its downward path as long ago as last summer.

– Credibility at stake –

Nevertheless, “it’s important for the ECB to preserve its currency’s credibility” in the eyes of investors, said Broyer at Natixis.

With QE only having just started, it is premature to start talking about when the programme might begin to be phased out again, said one central bank official, speaking on condition of anonymity.

But internal debate within the ECB’s governing council could become fierce in the future, especially as the most recent economic indicators suggest that recovery is already beginning to regain momentum.

Powerful ECB governors, such as the head of the German central bank or Bundesbank, Jens Weidmann, view the QE programme as unnecessary or even dangerous.

“If at the start of next year, growth is on track and inflation is rising again, the ECB’s biggest difficulty will be to resist pressure for an early end to QE or a scaling down of the bond purchases,” said Gilles Moec of Bank of America-Merrill Lynch.

Euro up after Greece agreement, Shanghai surges again

The euro pushed higher Friday after Greece’s promise to provide new plans to reform its bailout, while Shanghai stocks continued their latest rally towards a seven-year high.

Traders moved into the single currency after Greece’s deal with its key European partners, who agreed to finish work “as fast as possible” on completing its EU-IMF rescue programme.

But while the dollar’s rally against the euro and yen fizzled out, analysts said they expect the currency to resume its advance as the US Federal Reserve prepares for a rate hike while the Japanese and European central banks print more cash.

In equities trade, Tokyo swung from initial losses to end 0.43 percent higher, adding 83.66 points to 19,560.22, while Sydney added 0.40 percent, or 24.7 points, to close at 5,975.5.

Seoul was flat by the close, edging down 0.65 points to 2,037.24, and Hong Kong lost 0.38 percent, or 93.65 points to 24,375.24.

Shanghai rallied 0.98 percent, or 35.05 points, to 3,617.32. The market has climbed more than nine percent following an eight-session winning streak and is now at its highest level since mid 2008.

Investors welcomed news that Greek Prime Minister Alexis Tsipras had agreed to hand over a fresh package of reforms to its paymasters as his anti-austerity government tries to overhaul the terms of its bailout.

The left-wing Greek leader made the announcement after emergency talks with German Chancellor Angela Merkel, French President Francois Hollande and the European Union’s top officials on the sidelines of a European summit in Brussels. He said the bailout was “back on track”.

While the crisis is not yet over, the news will come as a relief to markets as an ongoing standoff over Athens’ bailout has raised fears it will crash out of the eurozone.

In afternoon Asian trade, the euro bought $ 1.0680 and 129.02 yen against $ 1.0660 and 128.77 yen in New York Thursday.

The dollar was at 120.73 yen, compared with 120.80 yen in US trade.

– Oil prices push lower –

The greenback has been on a rollercoaster ride this week after sinking in reaction to the Federal Reserve’s lowered expectations for interest rates and economic growth.

That cooled talk of a rate rise in early summer, sending the dollar tumbling and stocks rising. At one point in New York Wednesday, after the announcement, it fell to 119.57 yen while the euro was at $ 1.1010.

The US currency has since recovered, notching up gains over the past two days.

On Thursday the Dow eased 0.65 percent and the S&P 500 shed 0.49 percent, but the Nasdaq added 0.19 percent.

“We’re seeing a bit of profit-taking here,” Hartmut Issel, the Singapore-based head of equity, credit and macro for the Asia-Pacific chief investment office at UBS Wealth Management, told Bloomberg TV.

“I wouldn’t recommend to lose sight of the bigger picture. Yes, the Fed is currently a bit more dovish than we thought going into the meeting, but we are still talking about a very strong US economy, with a strong labour market.”

Oil prices fell further owing to lingering concerns about a global supply glut. US benchmark West Texas Intermediate for April delivery fell 47 cents to $ 43.49 and Brent crude for May slipped 23 cents to $ 54.20 in afternoon trade.

Gold fetched $ 1,172.01 against $ 1,164.38 late Thursday.

In other markets:

— Mumbai fell 0.73 percent, or 208.59 points, to end at 28,261.08.

National Thermal Power Corporation fell 6.25 percent to 145.50 rupees, while IT major Wipro rose 2.92 percent to 651.85 rupees.

–Bangkok closed down 0.14 percent, or 2.17 points, to 1,529.96.

Oil company PTT dropped 1.53 percent to 322.00 baht, while Bank of Ayudhya fell 4.15 percent to 46.25 baht.

— Taipei rose 0.13 percent, or 12.96 points, to 9,749,69.

— Wellington rose 0.20 percent, or 11.97 points, to 5,871.38.

Air New Zealand was up 1.06 percent at NZ$ 2.85 while market heavyweight Fletcher Building was unchanged at NZ$ 8.93.

— Manila ended flat, inching up 3.83 points to 7,818.38.

Universal Robina added 2.23 percent to 220.00 pesos, San Miguel Corp. fell 3.34 percent to 67.95 pesos and Philippine Long Distance Telephone dropped 1.40 percent to 2,810.00 pesos.

— Jakarta closed flat, dipping 0.75 points to 5,453.10.

Cigarette maker Gudang Garam lost one percent to 51,950 rupiah, while palm oil producer Astra Agro Lestari rose 0.49 percent to 25,750 rupiah.

— Kuala Lumpur closed down 0.30 percent, or 5.48 points, at 1,803.65.

Public Bank dropped 0.21 percent to 18.60 ringgit, Sime Darby lost 0.43 percent to 9.26 ringgit, while Tenaga Nasional gained 0.14 percent to 14.60 ringgit.

— Singapore rose 0.78 percent, or 26.28 points, to 3,412.44.

DBS Bank gained 0.50 percent to Sg$ 20.06 while real estate developer Capitaland was up 1.15 percent to Sg$ 3.52.

GLOBAL MARKETS-Greek pledge and cautious Fed soothe investors

* Euro set for best week in over two years

* U.S. stocks set to open higher on weakening dollar

* Brent set to rack up third weekly price drop

* Greek yields fall after Athens’ assurances (Updates prices, adds U.S. stocks)

By John Geddie

LONDON, March 20 (Reuters) – The euro headed for its best week in more than two years on Friday while yields on low-rated bonds fell as investors welcomed the Fed’s caution on rate hikes and a reform pledge from Athens that could avert a cash crunch.

Illustrating the problems low inflation is causing for central banks looking to normalise monetary policy in countries such as the United States and Britain, oil was set to rack up its third consecutive weekly price slump.

Futures showed Wall Street set to open 0.3 percent higher, with stocks on course for their best week in a month, as a Fed-induced weakening of the dollar gave a boost to U.S. exporters.

European shares edged up while euro zone bond yields fell after assurances from Athens that it will submit reforms needed to unlock bailout cash. The ECB’s trillion euro asset purchase scheme was also in focus at the end of its second week.

“The outlook for European markets is better than it has been for years, and the risks now are largely political,” said Christian Schultz, senior economist at Berenberg.

Greek bond yields dropped 45 basis points to 12.10 percent, while Portuguese, Spanish and Italian equivalents were all down around 1-2 bps. German bonds — the euro zone benchmark — were flat at 0.19 percent, just above a record low.

The euro was 0.5 percent higher against the dollar at $ 1.0712, well below Wednesday’s high above $ 1.10 but leaving the single currency on track for its best week since January 2013.

“What’s been dominating the euro over the course of the last week has been the moves in the dollar. The FOMC announcement was, on margin, more dovish than expected,” said Phyllis Papadavid, senior global FX strategist at BNP Paribas in London.

The pan-European FTSEurofirst 300 share index was up 0.3 percent at 1.601.42 points, having hit a new 7-1/2 year high just after markets opened.

The impetus gained from Wednesday’s dovish statement from the U.S. Federal Reserve has begun to ease, but European indices were supported by gains in the construction sector after Holcim and Lafarge agreed to new merger terms.

Asian stocks were broadly unchanged, with MSCI’s broadest index of Asia-Pacific shares outside Japan up 0.05 percent after rallying 1.3 percent the previous day. It was on course for a gain of over 2 percent for the week.

The region’s decliners included shares in Hong Kong, Malaysia, South Korea and Thailand. Australian and Chinese stocks were among the gainers in a choppy session.

The dollar index was down 0.5 percent at 98.72 but still well above a low of 96.628 plumbed midweek. The index was on track for slight loss on the week after touching a 12-year high above 100.00 on March 13.

The dollar saw its biggest fall in six years against the euro on Wednesday, after the Fed’s dovish statement.

In commodities, Brent crude oil was down 1.3 percent at $ 53.69 a barrel, hurt by oversupply worries after Kuwait said OPEC had no choice but to maintain output levels.

U.S. crude was down around 0.5 percent, just above the six-year low of $ 42.03 a barrel hit earlier in the week.

(Editing by Catherine Evans)