The Euro continues to hold close to a 2-month peak versus the greenback on investor euphoria driven by the ECB’s plan to face the Eurozone debt crisis head on. The head of the ECB, Mario Draghi, announced a new bond purchase program that many believe could be potentially unlimited in scope, the aim of which is to cap rising borrowing costs for distressed nations. One Société Générale strategist believes that the ECB’s moves will provide sufficient time and whet risk appetite but noted that the ECB cannot save the Euro alone and that it will be up to the individual governments to press for much needed reforms.
As reported at 1:25 p.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2633, close to Thursday’s high of $1.265 struck on the EBS trading platform. The Euro also edged higher against the Japanese Yen, trading at 99.676 Yen, a gain of 0.1% and close to Thursday’s peak of 99.80 Yen, a 2-month high. The Yen was under pressure in the wake of better than expected private sector employment data which helped to trigger a rise in U.S. Treasury yields. Given the probable increase in risk appetite, analysts expect that the Yen and its crosses will likely weaken in the short term.