Euro Strengthens on Banking Union Outline

Euro is seeing a bit of strength today, thanks to the latest news about the banking union. It’s not enough for the 17-nation currency to overcome its earlier losses to the dollar and the yen, but the euro is paring its earlier losses and looking toward the future.

Yesterday, eurozone leaders finally released an outline for its plan to tighten the banking system throughout the eurozone. For the last year and a half, leaders have been trying to figure out how to make it work. Eurozone leaders want to spare taxpayers from the costs of rescuing failing banks, and create a way to enforce similar standards across the eurozone.
The news came on the heels of an announcement that the Federal Reserve would begin tapering its asset purchase program in January. As a result, the euro didn’t get quite the boost it would otherwise have received on the news of a banking union. The euro is down against the dollar and the yen, but paring its losses and showing strength against the pound. Euro isn’t getting much help from the dramatic drop by gold.
At 14:00 GMT EUR/USD is down to 1.3673 from the open at 1.3695. EUR/GBP is up to 0.8362 from the open at 0.8354. EUR/JPY is down to 142.4105 from the open at 142.5460.

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