Euro Rebounds on EFSF Hopes

Barbara Zigah

By: Barbara Zigah

The common currency crawled back from an 8-month low against the U.S. Dollar on short-covering by investors following the news that the Eurozone’s key policymakers are considering efforts to shore up the European Financial Stability Facility, also known as the emergency bailout fund. Analysts believe the Euro could extend its rebound, at least in the short term, given that investors’ short positions are overwhelming.

Even so, the Euro remains vulnerable, as there are persistent doubts that the policy leaders will be able to design a comprehensive response in a timely manner, and many believe that timing is now the critical issue. In the longer term, however, the Euro is being undermined by expectations of an ECB rate hike within the next month, as sluggish growth in the Eurozone is seen as widespread, now, affecting even the German powerhouse.

As reported at 12:40 p.m. (JST) in Tokyo, the Euro was trading against the U.S. Dollar at $1.3532, holding well above $1.3360, the 8-month low struck yesterday. Analysts say resistance is seen at $1.3580. They further point out that the RSI shows that the currency is very near in oversold territory.

Other higher risk assets rebounded, including the Australian Dollar which bounced back from a 10-month trough against the U.S. Dollar, trading at $0.9880 from $0.9622. 

About the Author
Barbara Zigah

After working on Wall Street, Barb began her second career as a freelance writer at Daily Forex, where the CEO recognized fresh, untapped potential and was willing to give her a try. She’s never looked back. Since then, she’s worked steadily as a freelance writer and editor in the financial services and Forex-related industry.

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