Forex Market Review – Euro benefits from central bank support ahead of Greece elections

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The euro edged higher against the dollar during the U.S. session , heading for a 1 percent gain for the week . Investors are repositioning ahead of the Greek elections on Sunday. EURUSD hit a high of 1.2653, trading above the 1.26 level  since late Thursday when major central banks pledged they would provide coordinated action to  boost liquidity after the Greek vote  if necessary. This calmed market fears of a contagion risks in the financial system should there be any negative results.    ECB President Mario Draghi also said today that the ECB was prepared to support euro zone banks, should it be required.


Cable rebounds after an earlier drop, climbing to a high of 1.5688 in New York trading, the highest level this month. UK policy-makers’ pre-emptive move to cushion the economy from the euro crisis helped lift sterling.


The dollar came under pressure against the yen after series of weak data showed the U.S. economy is cooling and consumer sentiment fell to a six-month low in early June. Such disappointing data raise speculation that the Fed may introduce a third round of quantitative easing to stimulate the economy. Meanwhile the yen was given an added lift earlier in the day after Bank of Japan announced no change in its monetary policy. USDJPY consolidated losses and was range bound most of the US session, trading between  78.61 and 78.79.


Aussie rallied against the dollar on increased risk appetite amid central bankers pledge to prevent a liquidity crunch. AUDUSD climbed to a high of 1.0088, the highest in four weeks.