By: Barbara Zigah
The Euro moved closer to the recently struck 2-month peak versus the U.S. Dollar in Asian trading today, and market players expect to see further gains as sentiment for the common currency turned favorable.
The market is attributing the change in sentiment to the recent successful sovereign debt bond sales, plus encouraging signs that the Eurozone policymakers will move to shore up the current rescue fund, making adequate provision if and when Portugal and/or Spain decide to request financial assistance.
As reported at 1:27 p.m. (JST) in Tokyo, the Euro traded up against the U.S. Dollar, moving .1% higher to $1.3486, close to the 2-month peak of $1.3539 struck on the EBS platform on Wednesday.
Since the beginning of the year, the Euro has gained 5% of its value against the greenback, and traders are hopeful that the rise will continue, perhaps even to $1.38, provided that it first breaks through resistance which is pegged at $1.3510.
Market players are also attributing the Euro’s gain to a rise in Chinese equity share prices, which is seen as a good gauge of investors’ risk appetite; typically, rises in Chinese share prices provides a lift to higher-risk currencies such as the Euro, but also the Australian and New Zealand Dollars.
Most higher-risk currencies were under pressure earlier this week following the earlier release of robust growth data from China, which may foreshadow tightening of the country’s current monetary policy.