Euro is surging today as investors and Forex traders decide that there’s plenty to be optimistic about after all. Demand at the latest Spanish bond auction was strong, and there are expectations that the Federal Reserve will announce more stimulus at the close of its current two-day meeting. The news is being greeted with enthusiasm, and EUR/USD even touched 1.27 at one point.
The demand for Spanish bonds was fairly strong, even though Spain still had to offer yields of more than 5%. An auction of longer term notes on Thursday will provide a better test of what demand is really like. For now, though, there is excitement about the eurozone and what’s next. The fact that European leaders are ready to renegotiate Greek bailout conditions is also provided some hope.
Good news in the United States, where housing numbers were more robust than expected, is also helping support the euro against its major counterparts. Downward pressure on greenback is also coming from the expectation that monetary policy will remain loose in the United States in order to help stimulate the economy. It’s important to remember, though, that this could all be very temporary. The sovereign debt crisis hasn’t been solved yet, and there are still countries at risk.
At 15:34 GMT EUR/USD is higher at 1.2690, up from the open at 1.2576. EUR/GBP is up to 0.8070 from the open at 0.8026. EUR/JPY is higher at 100.2115, up from the open at 99.4945.
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