The euro is stuck in meetings.
The 19-member currency traded in its tightest range in a month versus the dollar as European leaders met in Brussels to try and break the deadlock about financial aid for Greece. French President Francois Hollande held out the prospect of a deal for Greece even as German Chancellor Angela Merkel said negotiations had “regressed a bit.” Finance chiefs will reconvene on June 27 for their fifth session on Greece.
“This Greek situation is once again holding everyone hostage,” said Stephen Casey, a New York-based senior foreign exchange trader at Cambridge Global Payments. “Common sense will come through and they’ll come up with some sort of agreement,” which would support the euro in the short term, said Casey, whose company is a foreign-exchange and payments provider.
The shared currency was little changed at $1.1205 at 5 p.m. New York time. It fell 0.2 percent to 138.52 yen. The dollar slipped 0.2 percent to 123.63 yen.
“You’re still seeing a euro that is holding up pretty well” because market participants expect an eventual deal to be struck, Christin Tuxen, a senior analyst at Danske Bank A/S in Copenhagen, said by phone. “People are very sidelined, risk-wise.”
Dueling proposals and a failure to find a compromise have left Greece without a deal to unlock aid, raising concern it may miss a payment of 1.5 billion euros ($1.7 billion) due to the International Monetary Fund on June 30, the same day its bailout ends. Sticking points include pensions, sales tax increases and debt relief.
The final deadline for an agreement is Sunday, according to Austrian Finance Minister Hans Joerg Schelling.
“The euro is probably going to spend most of its time either side of $1.12 until we get a clear picture of what’s going to happen in Greece,” Stephen Simonis Sr., chief currency analyst in New York at online foreign exchange broker FXDD Global, said by phone.
Assuming a Greek deal is reached, the common currency is poised to resume its downward march toward parity with the dollar, Steven Saywell, global head of foreign-exchange strategy at BNP Paribas SA, said in New York Thursday.
Traders are waiting for a conclusion to months of deadlock before re-establishing a strategy, known as carry, which will drag the euro down to $1 as soon as this year, Saywell said. Under carry trades, investors borrow in nations with low interest rates, such as the euro area, and invest where rates are higher.
The Bloomberg Dollar Spot Index halted a four-day advance even after reports showed U.S. household spending climbed by the most in almost six years while filings for unemployment benefits held below 300,000 for the 16th week.
Federal Reserve policy makers are closely watching labor-market developments as they try to time their first interest-rate increase since 2006.
The dollar gauge slipped 0.2 percent to 1,177.33 after climbing 1.2 percent during the past four days.