The Euro recovered against the greenback on Tuesday’s trading session but showed resistance at $1.40 on concerns about Irish and Portuguese debt.
Euro surged to $1.3823 on high buying in Asian and Middle East trading sessions on the news of successful Greek T-bill auction. The Euro later hit the level of $1.3921 and finally settled down to $1.3921 as investors and traders were concerned about the Irish and Portuguese debt situation.
Analyst Andrew Wilkinson from Interactive Brokers Group commented, “The rebound into the $1.40s was probably a bit too rich for the euro. I don’t see much point holding it above there.”
The Euro recently reached its high against the US dollar after US Federal Reserve disclosed its decision to purchase $600 billion worth of treasures by June 2011. The step taken by US Federal Reserve is expected to boost the US sluggish economy. However the many experts believe that the current step by Fed will devalue the US currency.
Wilkinson also believes that though higher US bonds yields have made dollar investment unattractive, but it could have positive impact on US economy by 2011. This would leave traders to concern about sovereign debt problems in countries like Portugal and Ireland.
Euro also fell against the Japanese Yen by 0.5 percent to 112.26 on the Euro zone economy concerns. The US dollar declined 0.7 percent to 80.60 against the Japanese Yen. Support for the pair USD/YEN is seen around 79.75 which is its record low since 1995.
Chief market analyst Omer Esiner at Commonwealth Foreign Exchange stated, “The bias was still for a weaker dollar but said the threat of Japan repeating its September intervention to weaken the yen was limiting the dollar’s downside.”
