This week was good for the US dollar as risk aversion sentiment caused by the problems in Europe increased demand for safety of the US currency. The end of the week, though, was marked by return of risk appetite, reducing gains of the greenback.

The week had the same issue at the forefront as the couple of the previous weeks — the European debt crisis. Perhaps, as in the previous year, market participants would become bored with Europe’s story that doesn’t seem to move anywhere and would turn their attention to other issues of the world economy. For now, though, the main market driver remains the same.

The first half of the week was positive for the dollar as Greece and Italy were plagued by uncertainty about their political future. By the end of the week tensions subsided on the signs the countries resolved their problems and will soon have new leaders. Resulting risk appetite hurt the greenback, reducing its gains by a great degree.

The euro surged against the US currency by the end of the week, but was unable to erase losses completely. The pound fared better and the advance by the weekend resulted in virtually no change over the week. The yen was more attractive as a safe currency to traders and the dollar was falling against the Japanese currency almost the whole week.

EUR/USD opened at 1.3828, fell to 1.3483 (the lowest level since October 10) and closed at 1.3748 this week. GBP/USD closed at 1.6067, near its opening level of 1.6065, while during the week it reached the low of 1.5867 — the lowest level since October 21. USD/JPY was down from 78.17 to 77.10.

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