Euro Steadier on Expectations of Higher Interest Rates

The US dollar slightly gained against its major rival currencies in Monday’s overnight trading session as the single currency traded with much steadier pattern on expectation of higher interest rates. The euro slightly declined to 1.4047 against the greenback as compared to 1.4068 on Friday’s North American trading session.

The euro was under pressure due to sovereign debt problems in European countries like Portugal and Ireland. Moreover the recent defeat of Merkel’s Christian Democratic Union in Germany created huge uncertainty among investors.

Head of forex research Kit Juckes from Societe Generale commented, “Results of German Elections were more of a catalyst for the euro/U.S. dollar slippage than a cause, in the sense that the euro had run out of momentum and short-dollar positioning was excessive.”

The dollar index DXY which measures the US dollar’s performance versus six major counterpart currencies gained to 76.316 in Asian trading session as compared to 76.242 on Friday’s late trading hours.

The US dollar also remained strong versus the British Pound as the Pound Sterling plunged to 1.5972 against the greenback as compared to 1.6020 on late Friday.

The greenback surged to 81.73 against the Japanese yen as compared to 81.46 on Friday’s late trading hours. The US dollar remained strong on expectations of higher interest rates as indicated by president Federal Reserve Charles Plosser.

However the Australian dollar reached its highest level against the greenback on Asian trading session. The Australian currency gained to 1.0272 against the US unit after reaching its day’s high of 1.0314 in overnight trading session.

About Rehan
Rehan Khan has been involved in the financial sector for last 6 years. During that time he has been associated with many financial institutions, banks and brokerages. Rehan is also a graduate in finance and has been writing for last 2 years for various web publications.

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