Forex Review – Euro supported after German parliament vote on Greek bailout

Important: This page is part of archived content and may be outdated.

The euro remained supported from a further decline against the dollar in the U.S. trading session after news that German lawmakers overwhelmingly backed a second bailout package for Greece. The German parliament voted 496 to 90 to approve the 130 billion euro ($174 billion) rescue package that was agreed upon in last week’s Eurogroup meeting.

The single currency had fallen sharply in the European trading hours as the German vote results were not out yet, and the single currency had been dented following news from the G20 Summit over the weekend that finance ministers from the Group of 20 nations refused to boost funding for the International Monetary Fund to tackle the European debt crisis.

The focus shifts to the European Central Bank LTRO operation later this week, when the central bank will inject the financial system with liquidity to avert a credit crunch in Europe through its long-term refinancing operation.

EURUSD traded mostly sideways in the New York session, between 1.3365 and 1.3416, falling from a 2-1/2 month high of 1.3478 reached earlier in the day.

Risk appetite was somewhat brought back from a further decline following a positive U.S. report on pending home sales, signalling the U.S. housing market is attempting to bounce back.

The ICE dollar index which tracks the greenback against six other currencies, rose to 78.573 from 78.341 late Friday.

Meanwhile, USDJPY dropped to a low of 80.12, from an earlier nine-month high of 81.65.

Against the yen, the euro  tumbled to Y107.18, reversing from a Y109.94 high earlier.

The British pound slipped against the dollar, with GBPUSD falling to 1.5809 compared to the day high of 1.5900.