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FXstreet.com (Barcelona) - The Euro is undergoing a correction lower in the near term following overnight comments from Chair of the Eurogroup Junker which displayed increased unease over the ongoing Euro rebound given its potential negative implications for economic recovery in the Eurozone.

Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that Junker stated that the Euro´s value is now ´dangerously high´ which represents the first high profile attempt by an Eurozone official to try to talk down the Euro. He feels that the comments appear to refer specifically to the EUR/USD rate which has increased from an intra-day low of 1.2043 in July 2012 to a recent high of 1.3404 following the introduction of the ECB's OMT programme and Fed's open-ended quantitative easing programme in the 2H 2012.

He writes, "Still it is an exaggeration to describe the Euro as "dangerously high" with the EUR/USD rate only modestly higher than its average over the last decade. A better overall measure of Euro strength as noted by ECB President Draghi is the trade-weighted index which is also broadly in line with its long run average. As such we can only infer that the Euro appears dangerously high compared to where Juncker believes it should be trading given the current weak economic situation in the Eurozone."

Elsewhere, Hardman finishes by noting that the German stats office revealed yesterday that the German economy expanded by only 0.9% in 2012 implying that the economy likely contracted by around -0.5% in Q4 2012 The comments will help to dampen Euro upside potential in the near-term but are unlikely to sustainably drive the Euro lower unless backed up by ECB policy easing ahead.

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