EU Summit Boosts Euro, But Rally Isn’t Big

The euro raised its head today after the European Union summit showed that the European politicians have willingness to resolve the region’s problems. The summit provided some solid results, but the rally of euro wasn’t as big as one would expect.
At last, the European governments acted instead of simply talking. They announced that the leverage for the European Financial Stability Facility “will be rapidly deployed”, €200 billion will be provided to the International Monetary Fund and the European Stability Mechanism will be implemented in July 2012. The signs that the confidence of the US consumers improved this month also added to the optimism of traders.
But for whatever reason, the euro hasn’t reacted to the news very positively. The currency rose after the good news, but later traded sideways and even showed a tendency to decline. Perhaps, market participants weren’t convinced that the plans of the European leader would save the eurozone. Perhaps, traders simply don’t want to risk before the weekend. If later is true, than Monday should reveal the real impact of the summit on the Forex market.
EUR/USD rose from 1.3339 to 1.3371 as of 20:17 GMT today, while intraday the currency pair demonstrated violent swings, rising as high as 1.3432 and falling as low as 1.3278. EUR/JPY was slightly up from 103.56 to 103.65 and EUR/GBP traded at 0.8539, rising a little above the opening of 0.8535.

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