Euro Holding Its Own in Thin Trading

By: Barbara Zigah

In thin trading in the run up to the Christmas holiday, the Euro edged higher against the U.S. Dollar but still on track to close out the year lower as investors worry that the Eurozone’s debt crisis will linger long into the new year. As reported at 10:22 a.m. (JST) in Tokyo the Euro was trading at $1.3063, rebounding from the $1.3050 traded in the New york hours. The trading band remains tight, between $1.3016 and $1.3120, and analysts expect it to remain there in the absence of any key economic data. Historical records show that the resilient Euro is only 2.4% lower against the U.S. Dollar, despite the incredible volatility of the past several months.

Investors are still considering the latest ECB tender, which failed to restore confidence and ignite the positive sentiment that economists had hoped to see. Nonetheless, analysts still believe that it was a good move on the central bank’s part, and could go some way to relieving the liquidity crunch; another similar offering is planned by the ECB for February. They expect that it will have at least given the Eurozone’s leadership some time to finalize their plans toward a resolution of the debt crisis.