Forex: Euro reaches close to 4 – month high against U.S. Dollar after ECB Trichet’s speech

Important: This page is part of archived content and may be outdated.

The Euro has been steadily rising since the beginning of the year and was close to hitting a four-month high against the U.S. Dollar, reacting to ECB Chairman’s speech. Since Trichet’s scheduled speech at 14:00 GMT, the EURUSD pair gained 36 pips within 20 minutes to touch 1.4163.

Much of the boost to the Single Currency was given by the ECB’s hint that an interest hike in the short term was still highly likely despite Japan’s nuclear crisis and the debt problems of Greece, Portugal and Ireland. However, concerns were eased as the European Summit is due later this week and EU leaders are expected to agree on a debt package including measures to deal with the debt-ridden peripheral countries. The ESM (European Stability Mechanism) plan calls for a 500 billion Euro rescue mechanism to be launched in 2013, which will use paid-in callable capital instead of guarantees, and would offer better interest rates than the current European Financial Stability Facility (EFSF).

EURUSD reached a U.S. session high of 1.4199, the highest since November 5th 2010 . The pair subsequently corrected and is currently trading at 1.4208.