Euro plummets in London

The euro fell sharply on Friday as investors expressed doubt that Greece could execute the austerity measures needed for the debt-ridden country to secure a further bailout. Comments from a maverick Greek government MP, who said he would oppose the package next week, added to nerves and helped send the euro down half a US cent, wiping out initial gains made on the back of a stronger-than-expected German business sentiment survey.
A suspension in trade of Italian banking stocks after a 3 percent slump added to worries about the impact of eurozone debt problems on the region's banks. "It's very ugly; a complete mess," said a trader in London. "There's a rumour the (Greek) austerity won't pass."
Greece's ruling party had 155 out of 300 votes in parliament in a vote of confidence last week, suggesting how thin its majority may be. By 1115 GMT, the euro had fallen 0.4 percent on the day to a session low of $1.4190. It retreated from a session high of $1.4306 hit after Germany's Ifo think-tank said its business climate index rose to 114.5 in June, beating expectations for a drop to 113.5.
Investors cheered the surprisingly strong Ifo reading, which painted a rosier picture of the German economy compared with a recent run of weak data. But that euphoria quickly dissipated due to uncertainty about what will happen if Athens is unable to pass radical economic reforms including tax hikes and spending cuts. The Eurogroup meets on July 3 to decide on a Greek bailout package, which has been made conditional on Athens approving more aid.
The euro fell to technical support around $1.4190, its 100-day moving average. Bids were seen around this level, but a close below was seen as paving the way to more losses. The dollar index, which measures its value against a currency basket, recovered early losses to trade flat on the day at 75.381, is flirting with a break of trendline resistance around 75.64, a level drawn off a peak reached in June 2010. The dollar was lower against the yen, easing to 80.17 yen with traders citing talk of a large expiry at 80.50 yen and importer bids at 80.00/10 yen levels.