Market Overview

Euro Down as Cypriot Banks Reopen

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The euro fell on Thursday morning as Cypriot banks prepared to open after being closed for an extended bank holiday while lawmakers sorted out the country's bailout agreement. The common currency was trading at 1.2791 at 10:43 GMT, almost an hour after Cypriot banks opened.

Cypriot lawmakers have put in place a set of strict controls to keep account holders from flooding banks and emptying their accounts. Though the controls are designed to prevent capital flight from the tiny island nation, many worry that there could still be a run on Cyprus' banks.

The euro has been under a lot of pressure this week as the effects of Cyprus' bailout are analyzed. The decision to force large account holders to shoulder a large part of the country's debt has not been well received in Cyprus or other southern European countries.

Following the decision, Dutch Finance Minister and Eurogroup Leader Jeroen Dijsselbloem said using uninsured depositors' money could become part of future bank rescues, which shook markets and sent the euro downward.

German unemployment data also weighed heavily on the euro on Thursday morning. Bloomberg reported that unemployment rose in March, a sure sign that the region's problems are bringing the powerhouse economy down.

The European Central Bank's decision to cut its economic forecasts has also added to the euro's tumble. Even though ECB President Mario Draghi reassured investors that the eurozone would begin to recover at the end of 2013, the bank has forecast a 0.5 percent contraction in 2013 followed by one percent growth in 2014.

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