Former European Commission President Romano Prodi this week said the worst of Greece's financial crisis is over and other European nations won't follow in its path.
So far, Greece has not sought help from its EU partners. However, an April and May deadline to repay debt back has pushed Greece to seek financing of around 20 billion euro on the bond market.
Greece has promised to cut its deficit from 12.7% to 8.7% this year while its long-term plan is to reduce the shortfall to below 3% by 2012.
Traders Betting Big on Euro's Decline
EUR/USD Pair Dance
The sheer liquidity of the euro and dollar pair has an overwhelming influence on the single currency for the past year or so. The dollar was heading towards a debasing path on concern of the mounting national debt and budget deficit. The euro, by virtue of being the market's favored alternative currency, typically moves with the dollar, but in the opposite direction.
However, the Greece sovereign debt crisis has switched the euro to the driver's seat this year as investors fled the euro seeking safety in dollar-based assets.
Although Europe's common currency fell against all of its 16 most active counterparts this year, the euro touched a one-month high versus the greenback as stocks gained as concern eased Greece would default.
For years, the Greek government has demonstrated rather thriftless spending behavior. This was exacerbated when Greece started to pay lower interest rates on government bonds by virtue of having entered the European Economic and Monetary Union.
Buy Euro Now, Says Goldman
It is this implicit safety net that prompted euro optimism from Goldman Sachs (GS). As reported by Bloomberg, Goldman Sachs is advising investors to buy the euro against the dollar, betting it may rise to $1.45, as sentiment toward Greece improves.