27/06/2015 04:01 AST
The ongoing Greek debt talks left currency markets in tight ranges on Friday while policymakers traded barbs in Brussels over the latest proposal for working out a debt deal between Athens and its official-sector creditors.
The euro fell below $1.12 after Greek Prime Minister Alexis Tsipras went on the offensive, seemingly pushing back against the latest offer from the International Monetary Fund, European Union and the European Central Bank.
"The immediate kneejerk reaction in the euro seems to be on the back of the Tsipras comments. But I don't want to oversell these moves because broadly I would expect these negotiations to be taking place right up until the 29th or 30th (of June)," said Richard Cochinos, head of Americas G10 FX strategy at Citi in New York.
"It will be going back and forth over the entire weekend and you cannot react too much to any one headline," he said.
Tsipras said the EU's founding principles were not based on blackmail and ultimatums.
Donald Tusk, the former Polish prime minister who chairs the Council of EU leaders, shot back that time creates pressures for Greek talks but not the euro zone, and that it would be easy to lose everything because of bad emotions.
"The comments are taking a little bit more of a contentious tone, which maybe means it is coming to a head," said Bill Samela, co-head of global FX trading at Bank of New York Mellon in New York.
An hour later the euro fell more to a three-week low of $1.1130. It last traded at $1.1163, off 0.37 percent on the day and down 1.65 percent for the week late in the New York session.
"It could be some position squaring ahead of the weekend, but this actual 30 pip drop is not fundamentally based upon anything. There were no headlines driving that move," said John Doyle, director of markets at Washington, D.C.-based Tempus Inc.
The Eurogroup of euro zone finance ministers on Friday rescheduled their talks on Saturday three hours earlier than planned.
"We may see a bit of a relief rally in the euro if there is a compromise at the weekend, but I would prefer to sell into those rallies, as there is still the case of monetary policy divergence between the euro zone and the United States," said Jeremy Stretch, head of currency strategy at CIBC World Markets.
Stretch was referring to expectation U.S. interest rates are poised to move higher while Europe and much of the rest of the world take rates in the opposite direction.
The dollar rose 0.15 percent to 123.83 yen, and gained 0.91 percent for the week.
Reuters
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