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MW: Euro gives up Greece-fueled gain on concerns the drama isn’t over
 
LONDON (MarketWatch) — The euro moved firmly lower against the dollar on Monday, as initial optimism over Greece’s bailout extension last week faded and was replaced with concerns that the can has just been kicked down the road.

The shared currency EURUSD, -0.60% dropped to $1.1320, after trading around $1.1378 late Friday in New York. The euro had jumped as high as $1.1430 earlier on Friday after eurozone finance ministers agreed on a four-month extension to Greece’s bailout program, after weeks of a standoff between the Greek leftist government and the country’s international creditors.

However, the deal doesn’t change Greece’s fundamental problems, said Richard Perry, market analyst at Hantec Markets on Monday, stressing that this is just a temporary deal.

“Greece is not in a position to get itself out of the predicament it’s in through the bailout terms, in my opinion. We’ll just have round two again of negotiations in a few months time,” he said.

The bailout extension isn’t final yet, and hinges on a list of budget cuts and economic overhauls the Greek government has to submit on Monday. Then it has to pass the scrutiny of the supervisors of the bailout: the European Commission, the European Central Bank and the International Monetary Fund. The Eurogroup of eurozone finance ministers will review the proposal on Tuesday. Read: Euro gives up Greece-fueled gain on concerns the drama isn’t over

“There’s also the possibility that that could go wrong,” Perry said.

The euro losses deepened in European morning trade after a gauge of German business confidence — the Ifo survey — missed forecasts.

The dollar rose against most other currencies on Monday, with investors avoiding looking ahead to Federal Reserve Chairwoman Janet Yellen’s testimony before Congress later this week. The WSJ Dollar Index BUXX, +0.51% a measure of the dollar against a basket of major currencies, was up 0.5% at 85.78. The ICE dollar index DXY, +0.48% gained 0.6% to 94.78.

The dollar USDJPY, +0.06% bought 119.06 yen, almost unchanged from ÂĄ119.07 late Friday in New York.
Taisuke Tanaka, chief FX strategist at Deutsche Securities, said in a note that the dollar still lacked upward momentum strong enough to breach the ÂĄ120-mark but is well supported around ÂĄ119, owing to dip buying by Japanese investors and importers.

Unlike other central banks, he said the Fed is unlikely to go ahead with raising rates before the market factors in such a move. And like the Fed, which will be patient before raising interest rates, “the dollar may need the patience to wait over the next several weeks for the right time to try new highs over ¥122,” Tanaka added.

Investors shrugged off minutes from the Bank of Japan’s Jan. 20-21 policy board meeting, released earlier Monday.

Many Bank of Japan board members said last month that the public’s conversion from a deflationary mindset was progressing, keeping in check speculation over further easing amid falling inflation.

The ruble tanked against the dollar after the U.S. and its European allies over the weekend said they were discussing slamming more sanctions on Russia over its actions in Ukraine. The existing sanctions have already hurt the Russian economy, and on Friday, Moody’s Investors Service downgraded the country’s sovereign-debt rating into junk status. On Monday, the dollar bought 64.179 rubles, up from 62.275 late Friday.

In neighboring Azerbaijan, the central bank depreciated the country’s currency by 33.5% against the U.S. dollar on Saturday. The official exchange rate was previously 0.7862 manat against the dollar and is now 1.05 manat.

In other currencies, the pound GBPUSD, -0.17% slipped to $1.5359 from $1.5399 late Friday.

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