The EUR Slowed as it Nears $1.50
October 20th, 2009 Posted in Euro-Zone
The European currency nearly touched the psychologically important $1.50 mark in Asia trading on Tuesday as low U.S. Interest Rates prompted market participants to sell the greenback, while firm regional share prices encouraged them to buy the common currency instead. The EUR rose to $1.4994, its highest level since August last year. Analysts said it is just a matter of time until the single unit breaches above $1.50.
The EUR climbed on optimism the global economic recovery is gathering momentum. The European currency rallied to the strongest level since August 2008 against the U.S dollar before reports this week that economists said will show the U.S. housing market and German business confidence improved, boosting demand higher-yielding assets. Gains in the EUR may be limited however on speculation the 16-nation region’s finance ministers will reiterate concern about the currency’s recent strength at a 2 day meeting ending today.
Demand for the EUR vs. the Dollar have increased after the Federal Reserve signaled in a statement yesterday that it will keep borrowing costs down while assessing ways to drain money from the banking system. Looking ahead, market players will pay attention to the earnings reports of U.S. firms to be released later today. If the reports show good results, U.S. stock prices will rise and the U.S dollar will decline further.
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Tags: Dollar bearishness, European Single Currency, Federal Reserve Bank
