Forex News, Fx News and Analysis
November 22, 2012 @ 2:23 pm

Euro rallies to 3-week high against dollar

The price action in the euro on Thursday suggests that investors remain optimistic about a deal to be reached by international lenders on disbursing the next aid trance to Greece.  Also, the Germany has made reassurances to everyone that progress is being made. The more conciliatory tone from German Chancellor Angela Merkel is being received positively.

Euro rallied to a three-week high against the dollar in Thursday’s European trading session, while against the yen the single currency reached a 6-1/2 – month high.

EURUSD rose 0.4 percent on the day to $1.28845, its highest since early November.

Against sterling, the euro rose to a one-month high. EURGBP rose to 80.86 pence, its highest since October 25, after making a clear break above resistance around 80.75 pence, its 200-day moving average.

Against the yen, the single currency rose 0.4 percent to 106.35 yen, having risen to 106.585 yen earlier. More gains could see it target resistance at the 100-week moving average around 106.69 yen.

Investors shrugged off euro zone PMI which were still below the key 50 level which demarcates  contraction from expansion. However the slightly better than expected numbers helped.

Sterling initially tracked the euro higher but found stiff resistance after negative comments from Bank of England policymaker Martin Weale who is pessimistic about growth in the fourth quarter.

Also knocking the pound a little was the CBI’s industrial trends survey for the UK weighed on sterling as it came in below forecast.

The yen remains under pressure on speculation Japanese elections next month will lead to an opposition party win. The LDP party is leading the polls and it advocates more aggressive monetary easing.

USDJPY extended gains in Europe to hit a new seven-month high of 82.82 yen. This is the highest level since April 1st. The pair may be vulnerable to a correction after such a sharp rally.

The Thanksgiving holiday in the US today means reduced trading volumes across most asset classes during the US trading session.

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