Forex News – Euro rises to six-week high against dollar

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Forex News – USD pulls off from 3 year low as Euro closes in on recent highsEURUSD rallied to a fresh six-week high in the US session as euro gained across the board on a rise in risk appetite as investors grew confident European leaders will come up with a broad agreement to deal with the euro zone’s debt crisis at a second EU summit on Wednesday. EURUSD soared 135 pips to regain earlier losses, bouncing off an early NY session low of 1.3822 to hit 1.3955 before the session ended.

 

GBPUSD hit a six-week high at 1.6006, rising from a dip to 1.5899, driven up by the rise in EURUSD and improvement in increased appetite for the riskier pound. Cable benefitted from an overall weaker US dollar as speculation that the Fed will carry out another quantitative easing program to support the economic recovery weakened the greenback.

 

The Canadian dollar strengthened against its U.S. counterpart to hit its strongest level in four-weeks. The loonie benefitted from a weaker US dollar as well as rising commodities, which were boosted by higher than expected China manufacturing PMI. Indicating the world’s second largest economy is still expanding and will demand more commodities. The Canadian dollar is a commodity-linked currency, and Canada is a major oil exporter. Also optimism on a deal for the European debt crisis soon helped lift risk appetite. USDCAD fell to 1.0020 from an early high of 1.0073.

 

USDJPY hovered close to Friday’s record low, briefly spiking down to 75.97early in NY trading. Demand for safe haven sent the yen higher amid uncertainty on the outcome of the EU Summit on Wednesday and concerns over the euro zone debt crisis. The pair remained above the psychologically important 76.00 support level supports level.

 

USDCHF reversed direction in the US session to erase all gains and drop to fell to a new four-week low of 0.8790 from the NY open of 0.8866. The Swiss franc strengthened as the market feels that there is still some room for upside in the franc , as some investors prefer to take refuge in a safe haven just in case European policy makers fail to come up with a comprehensive plan to resolve the region’s debt crisis this weekend.