The euro got some respite at the end of last week on cautious optimism that a deal will be reached between Greece and the rest of the euro zone.

EUR

The euro got some respite at the end of last week on cautious optimism that a deal will be reached between Greece and the rest of the euro zone. Also easing investor concerns was a ceasefire in most of Ukraine. Forex investors kept the single currency steady above 1.1400 ahead of a meeting of euro zone finance ministers in which they hope will find common ground to help support Greece beyond its current aid program and keep it inside the single currency bloc.

EUR/USD traded up to 1.1429 early on Monday as it held nervously through the last few weeks of a deadlock between the new coalition in Athens and its international lenders. Despite the apparent calm, with many market participants believing that risks are significantly less in letting Greece exit the euro area now then it would have been a few years ago, things could turn sour for the single currency if there is no agreement today.

USD

The dollar took a breather last week, as it paused just short of testing more than a decade high hit at the end of last month. From a technical point of view, the Dollar Index could confirm a bullish flag pattern with a break of 95.50 and send the gauge of dollar strength to well above 101, levels not seen since early 2003. It is currently trading just above 94.

JPY

The pause in dollar strength explains the Japanese yen’s advance at the end of last week. The Nipponese currency recovered from 120.48 to the dollar last week and traded at 118.37 on Monday. Forex investors reduced bearish bets against the yen amid speculation the Bank of Japan will not increase stimulus this week. The economy minister said last week that conditions were now favourable for the country to exit deflation. Meanwhile early on Monday, data showed the economy pulled out of recession with the GDP annualized preliminary reading 2.2 percent growth in the last quarter of the year from -1.9 percent the previous quarter.

NZD

The kiwi was the best performer among G8 currencies during the past week with the Reserve Bank of New Zealand holding firm from taking any steps to ease its monetary policy. Despite calls for policymakers to follow their Pacific neighbours Australia and adopt a dovish stance in its monetary policy to align with most central banks around the world, Governor Wheeler is yet to announce any such measures and together with some strong data helped push the New Zealand dollar higher. NZD/USD was up to a three-week high by 0.7528 on Monday.