The euro has climbed 4 percent against the dollar this month – a move that might be viewed as out of kilter with events in the euro area, where Greece looks to be lurching ever closer to a debt default.
While the euro’s rise to a one-month peak versus the dollar on Thursday is linked to dollar weakness after this week’s dovish Federal Reserve statement, analysts said it’s hard to deny that the euro is proving resilient in the face of a Greek crisis.
“Euro/dollar has been going up since mid-March. That basically tells you that the market is taking the view that Greece is not that relevant for the euro,” Vasileios Gkionakis, head of global currency strategy at Unicredit, told CNBC’s “Squawk Box Europe” on Thursday.
The single currency rose as high as $1.14 on Thursday, up more than 8 percent from a 12-year low just below the $1.05 hit in March.
That move comes against a backdrop of fading expectations that Greece and its international creditors will reach a deal to prevent Greece from defaulting on its debt at the end of the month.
Euro zone finance ministers are due to meet later Thursday and Friday, but expectations of a breakthrough in talks are low.
“Many analysts have been perplexed by the move in the euro and there are some interesting theories. One is that the yields (on government bonds) in the euro zone have risen, making the euro attractive relative to the dollar,” Boris Schlossberg, managing director at BK Asset Management in New York, told CNBC on Wednesday.
“Second, the spin out of Greece from the euro zone is not going to be a big material event.”
A debt default does not necessarily mean that Greece would leave the euro area, but it does raise that risk, according to analysts.