The risk of a sovereign default posed by Greece continues to hamper the Euro. For the time being this weakness suits the ECB as they have been keen to see the Euro devalued. The Germans in particular have resisted calls to reduce ECB interest rates to de value the Euro. The Greek problem has allowed the Euro to drop in value without moving key rates. This has been most convenient for the other members of the Euro Zone. Whilst the ECB continues to refuse to bail out Greece it is highly unlikely they would allow a Euro member to commit a sovereign default.

The real crunch will come in May when a substantial part of Greece’s debt is up for renewal. The Euro Dollar could fall as low as 1.20 before recovering against the dollar to 1.60 by the end of the year.