After days of decline versus the dollar, the euro climbed against the greenback after the German economic sentiment rose at a level higher than expectations, creating speculations of a quick European economic recovery, spurring demand for the Eurozone currency.
The German ZEW economic sentiment, a report that is highly taken into consideration by traders, since it reflects the biggest European economy financial scenario, reached the highest level in three days this Tuesday, supported mostly by the economic rebound perceived in the Eurozone countries during the past two months. The dollar also weakened on speculations that today BRIC leaders may discuss the greenback position as the main world reserve currency, creating negative speculations around the dollars outlook. The German unexpectedly favorable reported added to speculations around the dollar favored a bullish pattern to be built in the euro-dollar currency pair, reversing last weeks rather bearish trend.
The positive report in Germany is regarded by currency specialists in a rather skeptical way, since most of them agree that even if confidence has improved sharply since the first signs of economic recovery started to appear, conditions are still far from optimal and there is no solid support for a full economic rather in Europe as in other parts of the world. There are still many factor weighing on both sides around the euro-dollar pair, it is hard to predict what direction it will take.
EUR/USD rose to 1.3893 as of 12.17 p.m. GMT after it bottomed its bearish trend at 1.3760.
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