The Euro struck a fresh 6-week high versus the U.S. Dollar during Wednesday’s Asian trading session on expectations that a Eurozone banking deal is in the works aimed at eliminating those which are in danger of collapse and shoring up those still deemed viable. A unified banking system is believed necessary for the Eurozone to guard against future financial crises and growing debt. The Euro’s rise is also being helped by the continual pressure placed upon the greenback by the Federal Reserve’s insistence that further economic data points are needed before they begin curtailing its monetary stimulus program.
As reported at 11:00 a.m. (JST) in Tokyo, the EUR/USD approached this year’s peak trade which was struck on October 25th at $1.3832 and was at one point in the session trading at $1.3795, a 6-week peak. Currently the pair is trading at $1.3759, still a gain of 0.15%, and currency strategists believe it could breakout and soon test the $1.39 level. The U.S. Dollar Index, the measure investors use to gauge the dollar’s relative strength against its major peers slipped to a 6-week trough at 79.95 .DXY, a loss of 0.22%.
Euro Overvalued?
One major concern among analysts is that the Euro is quickly becoming overvalued, an issue which will make exports more expensive and put pressure on the European Central Bank to address those rising costs. As such, experts, including those at BNP Paribas, believe the Euro is likely to decline in the near term.