The euro continued to gain in thin Asian trade Wednesday, supported by better risk appetite amid signs of progress in U.S. fiscal cliff negotiations. The better risk sentiment was also reflected in many of the region’s major stock markets. Japan’s Nikkei 225 index was up 1.58% at 10,079.94 while in Hong Kong, the Hang Seng ended the morning up 0.7% at 22,652.75. Fiscal cliff discussions overnight showed President Barack Obama and House Speaker John Boehner appearing to find common ground for deficit reduction. Improved risk appetite also served to underpin U.S. stock and commodity prices last night. In Asia this morning, the euro vaulted last night’s $1.3238 high to peak at $1.3255 while euro-yen traded a high of Y111.72, its best level in over a year. In the early afternoon here, euro-dollar was at $1.3251 while the cross was at Y111.70 compared with the U.S. close of $1.3229 and Y111.40, respectively. For euro-dollar, the clear-cut break of the May 2 highs near $1.3240 now sees traders targeting a move to the May 1 highs near $1.3283. A move above the May highs would suggest a return to a $1.3000 to $1.3500 trading range, traders said. The next target may be the 50% retracement of the 2011 to 2012 down-move at around $1.3500. Those eying a potential head and shoulders bottom pattern may project a rise as high as $1.4250. Euro-yen’s gains also spurred dollar-yen strength this morning, the latter holding at Y84.28 after ending in New York at Y84.21. It traded between Y84.16 and Y84.41 through the morning, the latter marking a fresh 20-month highs for the pair.
EasyForexNews Research Team