The Euro lingered near a two-month low this week, inflicted by hesitation over Greece and feeble German economic sentiment figures that emphasises the increasing hurt in much stronger European economies from the region’s already delayed debt critical dilemma.
The Euro edged up to 0.2 per cent to $1.2722, but was still not near enough from a two-month low of $1.2661 set on early this week when the Euro slid on a scrawny German ZEW sentiment survey.
Support for the Euro still is at the 90-day moving average close to the $1.2667. The single currency bloc had several support on the Ichimoku chart closest to the $1.2653, the bottom of the daily cloud.
But a break below the Ichimoku assistance would be considered a vital bearish signal that could potentially lead to the test of 50 per cent retracement of its 3rd month rally at about $1.2608.
Hopes that international lenders may be getting close to disbursing aid to Greece have given their support to the Euro. Reports say that Germany wants to bundle Greek aid into a single payment scheme of more than 44 billion Euros and the German Finance Minister said that the idea was still under careful deliberation.
Yet, the possibility of it is cannot turn into reality until a broader agreement, the IMF and Eurozone policy makers remain at odds over the long-term target to bring Greece’s debt to a lesser scale and the IMF’s drive for the Eurozone to take additional losses over the Greek debt.
Another planned assembly of the 17-nation Euro group is due to happen this November but officials are still under negotiations for the proposals to be finalised and nail down a new deal.
Traders are possibly going to continue in searching for opportunities to sell the euro as long as it stays below the $1.2880 according to reliable reports from a Japanese brokerage house in Tokyo.
In the shorter term, the euro could still see a rebound effect if it does soar above the $1.2740. Such a rise could prompt short-term speculators to unwind their euro bearish bets. Against the yen however, the euro edged up 0.3 per cent to 101.14 yen, with the single currency getting some pardon following a hit on a one-month low of 100.33 yen earlier this week. The euro’s afflictions gave support to the dollar index, which gauges the greenback’s value against a basket of chief currencies. The dollar index stood at 81.022, close to a two-month high of 81.241 this week.
The dollar, whose large liquidity made it a much safer refuge asset for traders were also supported by concerns regarding the US fiscal cliff which alarming budget cuts and tax increases that threaten to tilt the US economy into a downturn should Congress cannot come up with a final resolution by the end of the year. Such apprehension may continue to linger long and persist on the euro against the dollar if the issue is not dealt with accordingly. The dollar remained wedged within a well-trodden series against the yen and traded at 79.51 yen with 0.2 per cent from the late US trade early this week.