US Dollar Pulls Back on Improved Risk Appetite

Once again, optimism is growing amongst Forex traders that a deal will be reached to contain sovereign debt in Europe. Even as Spain is downgraded, risk appetite is improving on the outlook for a plan to stop the spread of sovereign debt contagion.

Indeed, rumors are flying that an agreement has been reached, and that means Forex traders are feeling optimistic enough to look for better yields in their currency trading efforts. As a result, the US dollar is down virtually across the board. Greenback is even losing ground to the Japanese yen. (Yen, however, is down against the euro and the UK pound.)
While the US dollar is struggling right now, though, there are some that think there is the possibility for some gains in the near future. Even though there are rumors of an agreement amongst eurozone leaders, we’ve heard these rumors before — and they’ve turned out to be nothing. If that is the case again, the US dollar stands to gain quite suddenly. For now, though, expect some weakness from the greenback in Forex trading.
At 13:45 GMT EUR/USD is on the rise, at 1.3797, up from 1.3752 at the open. GBP/USD is also higher, at 1.5810 versus the open at 1.5713. USD/JPY is down to 76.76 from the topen at 76.81, and USD/CAD is down slightly to 1.0120 from the open at 1.0141.

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