The Euro Strengthens against the US dollar on Wednesdayâ€™s Overnight Trading Session
The Euro gained in Wednesdayâ€™s overnight trading session as the investors were hoping for an interest rate hike by European Central Bank. The US dollar exchange rate remained under pressure in reaction however reached its six month highest against the Japanese currency.
The dollar index DXY which measures the US dollar movement against its major rival currencies declined to 75.631 on Wednesdayâ€™s overnight trading session as compared to 75.883 on Tuesdayâ€™s North American trading session.
The Euro exchange rate advanced to1.4319 against the US dollar on Wednesdayâ€™s overnight trading session however later settled to 1.4307 as compared to 1.4227 on Tuesdayâ€™s late trading hours. The single currency gained on positive regionâ€™s economic data as Germanâ€™s factory orders increased by 2.4 percent for the month of February which surpassed wide expectations.
The traders remained optimistic about the euro on the news that European Central Bank could increase its interest rate to 1.25 percent from 1 percent despite Portugalâ€™s sovereign debt crisis.
Senior currency strategist Elsa Lignos from RBC Capital Markets commented, â€œWith long euro positioning looking increasingly stretched heading into the ECBâ€™s meeting tomorrow, confirmation of the expected 25 basis-point hike may prompt some selling of the fact.â€
The US dollar gained to 85.11 versus the Japanese Yen on Wednesdayâ€™s Asian trading session as compared to 84.83 on late Tuesday. The pair USD/YEN reached its high of 85.52 in overnight market. Analysts are expecting US dollar to further gain against the Japanese unit in coming weeks. Resistance for the pair USD/YEN is expected around 87.75 according to most currency strategists.
The British Pound also surged versus the US dollar to 1.6298 on Wednesday as compared to 1.6283 on Tuesday.
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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