The Euro was lifted close to an 11-month peak versus the U.S. Dollar during the Asian trading session, propped up by growing optimism that a true economic recovery in the Eurozone might finally be under way. Last Friday, the European Central Bank reported that Eurozone banks have been making repayments on their emergency loans at a faster pace than ever before, a sign say analysts that confidence among the banking sector is on the rise. The ECB’s somewhat tight monetary policy relative to the ultra accommodative stance of the Federal Reserve is also propping up the Euro.
Other economic data is also providing support to the common currency; in Germany, each of the IFO business climate surveys edged higher in January, with the outlook improving to a reading of 100.5 from 97.9, against expectations of an increase to 99.0. Germany has been the driving force for the Eurozone’s recovery and the improved sentiment suggests that last year’s contraction might now be reversing.
As reported at 11:38 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.3459, just a few pips from Friday’s peak of $1.3480. Currency analysts say the pair faces resistance at specific levels approaching $1.35, notably last year’s peak of $1.3486. The Euro also moved higher against the Japanese Yen, with the EUR/JPY pair recently striking 122.90 Yen, a 21-month high, and approaching 123.33 Yen, the highest price in 2011.
Euro Lifted as Confidence Returns
Barbara Zigah