Euro Jumps To Fresh 5-week High Against US Dollar
Thursday, 26 January 2012 | 12:47
The Euro edged higher against the currencies of the U.S., the U.K. and Japan in early deals on Thursday as European equities rallied after the U.S. Federal Reserve provided a dovish outlook on interest rate yesterday.
The Federal Reserve said that its near-zero interest rates would be unaltered 'at least through late 2014'.
While most of its rate-setting members favor standing pat on low interest rates for the next few years, the Fed adopted an explicit inflation target of 2 percent and expressed a willingness to consider more quantitative easing if conditions warrant.
Meanwhile, the IMF has urged the European Central Bank to enhance crisis management by providing sufficient funding through expanded use of the ECB's balance sheet.
Adding real resources for the European Financial Stability Facility (EFSF) and the European Stability Mechanism (ESM) will also help Europe to deal with the crisis more efficiently, the International Monetary Fund said in a note prepared for the January 19-20, 2012 meeting of the Group of Twenty Deputies in Mexico City.
Thus far, Germany's DAX advanced 1.46 percent, the U.K. FTSE 100 index climbed 1.15 percent and France's CAC-40 index jumped to 1.11 percent.
In economic news, Confidence among German consumers is set to increase in February, survey data from the market research group GfK revealed today. The forward-looking consumer confidence index is seen at 5.9 in February, higher than the revised 5.7 in January. Economists had forecast the score to stay unchanged from the initial January reading of 5.6.
The euro rose to 1.3175 against the dollar around 5:05 am ET, its highest level since December 21, 2011. The pair is thus approaching the 38.2 percent retracement level around 1.3250 in the 4-hour chart between a high on October 27, 2011 and a low on January 13.
Against the yen, the common currency advanced to a 5-week high of 102.19 around 5:30 am ET. The next upside target for the euro-yen pair is seen around the 102.60 level at which the 38.2 percent retracement level lies in the 4-hour chart between a high on October 30 and a low on January 15.
The single currency also rose to a 2-day high of 0.8391 against the pound around 5:30 am ET. Immediate resistance level for the pair is seen at its psychological mark of 0.84 and a move above would lift the pair to a 4-week high.
On the flip side, the euro reached a 2-day low of 1.2068 against the Swiss franc and this was down by more than 0.3 percent from yesterday's 1-week high of 1.2111. The euro-franc pair is presently worth 1.2073 and a move below the 1.2060 support could set its lowest level in more than 4-months.
Looking ahead, the U.S. new home sales, leading indicators, durable goods orders - all for December and the weekly jobless claims for the week ended January 21 are expected in the New York morning session.
Source: RTT News
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