Forex Market Review – Euro steady above $1.31 after EU Summit

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EURUSD remained steady in the European trading session holding on to most gains made in the prior session after sentiment was boosted on news that the EU Summit on Monday resulted in striking a deal on a new 500 billion euro ESM rescue fund.

Investor concerns on the Greek debt crisis were also eased by assurances that an agreement on a second bailout for Greece will be reached by the end of the week

EURUSD hit a session high of 1.3212 but failed to extended higher as unemployment data show the euro zone jobless rate hit a 13-year high in December, at 10.4 percent. Also capping gains are concerns over Portuguese debt, as the country’s bond yields are near euro-era highs.

 

Sterling hit a two-month high against the dollar lifted by improved sentiment as well as a weaker dollar helped. GBPUSD soared to 1.5794 from 1.5728, the highest since November 18. However further gains will be capped as the Bank of England is expected to introduce another round of quantitative easing in its next policy meeting later this month.

 

EURCHF fell to 1.2038, close to the four-month low and around the SNB 1.20 cap. The safe haven Swiss franc also remained strong against the dollar. USDCHF reached a two-month low of 0.9121 .

 

USDJPY took a pause from its sharp decline and is trapped in a 76.16/40 range but close to the October 31 low when the Bank of Japan intervened in the currency market.