Optimism Returns to Help Euro

Euro is gaining ground now, erasing earlier losses, as optimism returns to the Forex market. Earlier today, concerns about the gulf between Germany and France sent the euro lower. Now, there is optimism.

The optimism is fairly cautious, though. No one seriously expects a breakthrough at the upcoming eurozone conference. However, there is the expectation that eurozone leaders will be able to agree on enough to keep hope for the 17-nation currency region alive.
Plus, many are awaiting tomorrow’s interest rate decision from the ECB. In an effort to help the eurozone’s economy, which appears to be flagging, the ECB is expected to cut interest rates. This indication that more policymakers are willing to work together to do what is needed is providing some of the support for today’s euro gains.
Right now, dollar loans are in demand. Eurozone banks are asking the ECB for loans in dollars, which are cheaper since a joint action by six central banks reduced the cost of dollars, and renewed dollar swap agreements designed to promote liquidity. All of this is positive for the euro — at least for now. What happens if the eurozone summit fails to provide any new direction is up for debate.
At 19:46 GMT EUR/USD is higher at 1.3405, slightly up from the open at 1.3403. EUR/GBP is lower at 0.8536, down from the open at 0.8590.

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