Euro Treads Water Above 11-Month Low

By: Barbara Zigah

The common currency Euro managed to remain above the recently struck 11-month low against the U.S. Dollar, even as traders keep a close watch on the outcome of the upcoming Italian sovereign debt auction. Markets will also watch for economic data out of Germany tomorrow, with the release of December’s Consumer Price Index, which will play on the Euro if the consensus call for a weakening of the CPI is realized.

As reported at 2:06 p.m. (JST) in Tokyo, the Euo was trading at $1.3068 in Asian trading, hovering near the December 14th low of $1.2945. Some support is seen immediately at around $1.3050. Since early May, when the Euro hit its peak for the year, the common currency has lost nearly 12% of its value, and most analysts expect it to remain range-bound through the year’s end unless the Italian debt auction repeats its recent poor performance. Analysts are watching to see if the 7% threshold is breached again, an indication that confidence has eroded.

Last week, one retiring member of the European Central Bank said that he believed that the ECB might consider additional asset purchases, much like that done by the Federal Reserve’s FOMC, should economic conditions change.