Euro falls in London

The euro fell against the dollar on Friday as wariness about disagreements on how to tackle Greece's debt and ahead of a Spanish regional elections caused investors to cut back bullish euro bets before the weekend. A weekly close below the euro's 55-day average around $1.4301 could push the euro back towards a seven-week low of $1.4048 struck on EBS trading platform earlier this week, analysts said.
The euro's losses deepened on reported sovereign selling, later followed by selling from leveraged names as spreads between German and peripheral bond yields widened. The euro was down 0.55 percent at $1.4220, more than a cent below the day's high around $1.4345. Traders cited stop loss orders below $1.4210 and $1.4180, adding a break below there could accentuate losses.
Financial markets remained on edge over persisting concerns about the possibility of debt restructuring in Greece and were mindful of possible event risk from Spanish local elections at the weekend. "There are a number of headwinds ahead that favour playing the euro from the short side," said Jeremy Stretch, currency strategist at CIBC.
Trading may also be influenced by a large $1.4360 digital option for expiry on Monday, with euro/dollar needing to hold below that level for a payout. "The euro has good support and although there is talk of options at $1.4360, I think it can test resistance at $1.4425 in the near term," said Gavin Friend, currency analyst at nabCapital. The euro last traded near that level on May 11. The euro has shed almost 5 percent since hitting a peak near $1.4940 in early May.
Data showing German producer prices rose strongly buoyed expectations of more European Central Bank rate hikes, though this was overshadowed by a split emerging between eurozone policymakers and politicians on how to tackle Greece's debt. Spain's Socialist government, faces major losses to the centre-right opposition Popular Party and analysts are wary that there could be the potential for unearthing of unknown financial problems.
The euro gave up gains against the yen, to trade 0.5 percent down on the day at 116.21 yen, although it stayed well above a recent two-month low near 113.40 yen. The dollar recovered earlier falls to trade up 0.3 percent at 75.379 against a basket of currencies, though it stayed below its recent peak of 76.00 struck earlier this week. The dollar was up 0.1 percent at 81.70 yen.