Eastern Europe Helps Support EURO
Increased risk appetite forced the dollar into retreat overnight with the EURUSD hitting highs of 1.4190 before retracting to its present 1.4170 (see hourly chart). The greenback is favored to come under further selling pressure during the North American session.
The Euro benefited from reports over the weekend that the economy of Eastern Europe was recovering faster than expected from the worst recession since the 2nd World War. In addition, official comments stated that Greece should not expect to be bailed-out of its fiscal crisis by the Euro-zone.
Further statements also pointed out that European households still need to brace themselves in order to contend with falling employment and tightening credit conditions in the near future. As such, the ECB is still expected to keep its interest rates at the record low of 1.00% at its next month’s rate decision despite German consumer confidence dropping for the fourth month in a row.
Elsewhere, the GBPUSD succeeded in halting its last week’s decline by bouncing back to its present value of 1.6140. However, further improvement may remain capped if the pair is unable to break-through its important 200-Day SMA level of 1.6184.
