EUR/USD (a 4-hour chart)
Euro fell sharply during the European trading session on Friday after banks reported that they intend to pay a smaller-than-expected amount of funds at cheap emergency loans taken from the European Central Bank last year.
According to the ECB, 356 banks paid 61.1 billion euros (80.5 billion U.S. dollars) on loans taken in February of the last year in the second long-term refinancing program (LTRO), provided by the ECB. This amount is half the market forecast.
The euro/dollar has plunged to six-week low 1.3157. In addition, the euro handed position against other major currencies such as the Japanese yen and the British pound. Market participants have tempered their expectations for tighter monetary conditions in the euro area.
Euro showed weakening even before the news of the payments on the LTRO, as the European Commission published the gloomy forecasts for the eurozone. According to the forecast of economists official EU, euro area GDP in 2013 will be reduced for the second year in a row.
Italian elections continued until Monday afternoon. EUR/USD opened up with a gap at the beginning of the Asian trading session, to start the week on fresh highs around 1.3220, just to fall back to a session low of 1.3055.