Euro Reaches 7-Week High on Chinese Investing Improvements
After the European Central Bank policy makers’ affirmation that rates will be maintained on hold, the euro reached a 7-week high against the dollar.
The euro reached a 2-month record high against the dollar, after a report released in China indicating that urban fixed-asset investments had the highest rise in two years, which increased confidence and demand for higher-yielding currencies and the euro. A part from the ECB rate policy that has been pushing the euro up against the dollar for the past weeks, in the United States, it is very likely, according to General Motors Corp. executives, that the largest U.S. vehicle producer may file for bankruptcy due to its critical financial condition.
Speculations that the ECB policy makers will not follow other major economies’ central banks with aggressive measures, like those taken in Japan, are having a positive impact in the Eurozone currency. Maintaining interest rates on hold indicates a certain level of safety, which strengthens confidence among traders to buy assets in Euro, consequently plunging the dollar into a downfall. Until there are no solid evidences that the U.S. economy is actually recovering, it will be difficult to see the euro below $1.30.
EUR/USD traded at 1.3651 rising from 1.3585, after peaking its seven-week high in the beginning of the week, the EUR/USD currency pair is once again testing this resistance around 1.3650.
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