Forex Trading News – Euro recovers from slide on rate hike hopes

Important: This page is part of archived content and may be outdated.

The Euro is recovering from Monday’s slide against the Dollar and is climbing steadily since late Asian trading on Tuesday morning. Yesterday’s comments by Eurogroup Chairman Jean-Claude Juncker that the Single Currency is overvalued had put the Euro under pressure and sapped buying appetite.

There were also reports of a comment by a German finance ministry official who remarked that a second aid programme for Greece was not certain.

Despite being rattled by these comments, the Common Currency remained resilient and soon rebounded to edge closer to its month high.

The Euro is being supported by expectations of rate hike by the European Central Bank and all focus is on any signals from the ECB in its monetary policy statement later in the week.

Meanwhile, if Europe does raise rates, the view is that the United States will likely not, and this interest rate differential is in favour of the Euro, which will help keep it supported.

“Those comments (from Juncker) probably weighed on the euro at the margins. But the direction of a weaker dollar is pretty clear at this point in time, so I’m expecting a bounce in the euro,” said Richard Grace, chief currency strategist at Commonwealth Bank in Sydney.

Also despite any negative views from some, there is belief that Greece is likely to get a vital tranche of aid in July to avoid default, and in the meantime policymakers are rushing to arrange a voluntary rollover of Greek debt. So for now, the Euro is buoyed by these expectations.

Since the open of Asian trading on Tuesday at 1.4574, EURUSD has risen to 1.4647 by 07:00GMT.