EUR/USD Near 1.29 as ECB Issues Deadline to Cyprus

The euro traded 0.5 percent from an almost four-month low after the European Central Bank gave Cyprus until the start of next week to agree to a bailout package or lose emergency funding.

The 17-nation currency headed for its biggest weekly decline in six against the yen before a report today on German business confidence, a day after data showed manufacturing unexpectedly shrank in Europe’s biggest economy. The yen has risen against most of its major peers this week as new leaders of the Bank of Japan (8301) took over to try to deliver on months of pledges to defeat deflation.

“One of the main attractions of the European Union was to have these backstops from the ECB,” said Derek Mumford, a director at Rochford Capital, a currency risk-management company in Sydney. “The cracks are widening in the EU and the euro certainly has potential for further weakness and a move down to $1.2650.”


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