The Euro has been trading in a sideways, choppy manner as investors await news from the two-day European Union summit.
The Euro has been trading in a sideways, choppy manner as investors await news from the two-day European Union summit. Earlier in the trading session, the Euro received a boost from comments by Germany’s Merkel and a decision by the European Central Bank’s Trichet.
The Euro rebounded after German Chancellor Angela Merkel presented her aid package plan for cash-strapped and debt laden Greece. Short covering turned the Euro around after Merkel said she supports loans from the International Monetary Fund and other European nations as a last resort if all other means of support fail and the country faces default.
European Central Bank President Trichet also contributed to the turnaround in the Euro by extending the bank’s emergency lending rules. Earlier in the year, Trichet said the central bank would not ease its collateral policy for the sake of a single country. This action gave weaker shorts and excuse to pare their positions.
Although these actions are helping to support the Euro, there is still no indication that a solid bottom is in place and that the trend is getting ready to turn higher. The EUR USD is likely to continue to trade under volatile conditions over the next two days as news from the European Union summit meeting is likely to leak throughout the day.
The U.S. Dollar has been on pressure most of the day against all majors. Renewed interest in higher-yielding assets is contributing to the weakness. The strong U.S. stock market has been most supportive to the Australian, New Zealand and Canadian Dollars.