Forex Flash: EUR weakness explained – UBS

FXstreet.com (Barcelona) - In Cyprus, there are fresh indications that deposits greater than EUR 100k in two Cypriot banks will likely sustain larger losses than originally feared. According to Research Analyst Gareth Berry at UBS, “This may partly explain why the EUR/USD fell to a new 14-week low of 1.2771 overnight.” Meanwhile, a quarterly IMF survey released on Saturday probably did the euro no favors either.

The survey revealed reserve managers were net euro sellers during Q4 2012 (as we discuss in more detail below). In Japan, the USD/JPY traded heavy in the wake of a quarterly Tankan report and the official China manufacturing PMI - both of which came in on the soft side of consensus. The Tankan showed that large Japanese manufacturers see USD/JPY trading at an average of 85.22 during the current fiscal year which begins today.