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Forex - EUR/USD gains on hopes Cyprus contagion fears will ease

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Investing.com - The euro rose against the dollar on Friday amid reports Athens may assist Cyprus by taking over Greek units of Cypriot banks and help steer the island nation away from financial collapse.

In U.S. trading on Friday, EUR/USD was up 0.66% at 1.2985, up from a session low of 1.2889 and off from a high of 1.3009.

The pair was likely to find support at 1.2844, Tuesday's low, and resistance at 1.3107, last Friday's high.

Friday marked the first time in five days the pair broke the 1.3000 mark.

News that Greece may help Cyprus contain its financial crisis even if partially sparked a rally for the single currency.

Cyprus's parliament is due to hold emergency meetings throughout the day to mull an ultimatum imposed by its eurozone neighbors and the International Monetary Fund to raise EUR5.8 billion necessary for a EUR10 billion bailout package.

Representatives from lending bodies originally called on Cyprus to raise the money by slapping a one-time tax on bank deposits, which rattled markets worldwide amid fears the do-not-touch status of bank accounts may be changing when crafting European bailouts.

Still, proposals remain on the table call for taxing bank accounts holding at least EUR100,000, which watered down Friday's optimism by fueling uncertainty.

Cyprus must come up with a plan to raise EUR5.8 billion by Monday or risk seeing the European Central Bank halt the flow of emergency funding into its financial sector.

Weaker-than-expected German business sentiment data capped the euro's gains.

The Munich-based Ifo Institute for Economic Research reported earlier that Germany's business climate index dropped to 106.7 in March from 107.4 in February, defying market expectations for a gain to 107.6.

The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.20% at 0.8519, and EUR/JPY trading up 0.21% at 122.67.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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