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Euro loses steam after rising on Greek debt deal as caution lingers
[TOKYO] The euro held steady on Monday, rising initially in relief following a conditional loan extension deal for Greece, but losing steam as caution towards the debt saga persisted.
Euro zone ministers late on Friday agreed to extend Greece's financial rescue package by four months.
Greece had asked for a six-month extension, but the financial markets still drew some relief as the agreement removed the immediate threat of its exit from the single currency bloc after weeks of difficult and often predictable negotiations.
The euro's gains on Friday were nevertheless modest as there were still kinks to be ironed out on Monday.
The common currency was little changed at US$1.1381 after rising to as high as US$1.1430 from a low of US$1.1277 on Friday in response to the Greek loan agreement.
The euro also stood steady at 135.55 yen after eking out a 0.2 per cent gain on Friday.
Greece has to submit to the Eurogroup on Monday a list of reforms it plans to implement during the remainder of the bailout period, which needs the approval from the troika comprised of the European Commission, the European Central Bank and the IMF.
Moreover, the conditional nature of the four-month extension left the outlook unclear. "It is a four-month extension but Greece still has to receive approval from the Eurogroup and the troika at the end of April. It is a deal with many conditions attached, so it hasn't been all bids for the euro," said Shinichiro Kadota, chief Japan forex strategist at Barclays in Tokyo.
At the end of April, the troika will decide if Athens has followed through with the reforms and will determine if it gets its last aid tranche.
Headlines from Greece's debt struggles may continue to keep the currency market wary, but investors will also be attempting to gauge dollar-centric factors this week.
Market players will be watching Federal Reserve Chair Janet Yellen's testimony before the US Senate Banking Committee on Tuesday for any hints about when the US central bank may begin raising rates.
Ms Yellen's comments will draw extra attention after minutes from the Fed's January meeting released last week were seen as more dovish than expected and dampened expectations for an early interest rate hike.
The dollar was steady at 119.07 yen after bouncing from a low of 118.30 on Friday, helped by a rise in US debt yields after the Greek bailout agreement.
The dollar index edged up 0.1 per cent to 94.324.