"The market has stabilised before we go into the US GDP number later today and I think that's going to drive the next leg of the price action," said HSBC director of currency strategy Paul Mackel. Investors this week had heavily sold Greek and other eurozone peripheral bonds on concerns whether they could grapple with their huge fiscal deficits.
EU Monetary Affairs Commissioner Joaquin Almunia said Friday an EU bailout for Greece was not possible, sparking a widening in the premium investors demand to hold 10-year Greek government bonds rather than benchmark German bunds. The Financial Times had earlier quoted high-level EU officials as saying Greece would in the last resort receive emergency support from other eurozone governments and the European Commission.
Official support was still likely, said Credit Suisse currency strategist Ray Farris, despite Almunia's comments. "If the Greeks fulfil their commitments, EU assistance will be easier to give. There is official support, but none of it is unconditional and the bulk of the heavy lifting has to be done by Greece."
The single European currency was flat on the day at $1.3970, recovering from an early drop to $1.3912 on trading platform EBS, its weakest since mid-July. Traders eyed whether the pair would end above or below its 55-week moving average of around $1.3983. They also cited large options with strike price of $1.4000 expiring later in the day and influencing price action.
Still, the euro was on track to fall some 7 percent against the dollar since December. Against the yen, the euro hit a nine-month low of 124.81 yen on EBS. It was last up 0.5 percent at 126.10 yen.
The euro also tumbled against the Swiss franc, dropping to 1.4645 francs, its lowest since last March, the month the Swiss National Bank first intervened to counter franc strength. The dollar index, a measure of its performance against six other major currencies, touched a five-month high at 79.156. It was last trading flat at 78.929. The dollar rose 0.4 percent at 90.25 yen, recovering from a session low of around 89.59 yen. It had hit a six-week low of 89.14 yen on Wednesday.