The euro rose against the U.S. dollar on Tuesday, as the disboursement of Greece’s next tranche of financial aid sparked new hopes for progress in tackling the euro zone’s debt crisis. EUR/USD hit 1.3371 during late Asian trade, the pair’s highest since January 18; the pair subsequently consolidated at 1.3360, rising 0.35%. The pair was likely to find support at 1.3270, the low of January 17 and resistance at 1.3358, the high of January 14 and a multi-month high. At a meeting in Brussels on Monday, the eurogroup of euro zone finance ministers gave the green light for the payout of EUR9.2 billion to Greece this month. Of the funds, EUR7.2 billion in bonds are for the further recapitalization of Greek banks and EUR2 billion in cash are to cover the government’s budget needs. The quick decision of new loans for Greece indicated greater European political confidence in Athens’ ability to press ahead with initiatives outlined in the nation’s international aid program. Meanwhile, market sentiment also found some support amid hopes for a short-term agreement to break the deadlock in U.S. budget negotiations after U.S. Republicans said they would take up a plan next week that would extend the debt limit to April 15, requiring both the House and Senate to pass budget resolutions by then. The euro was also higher against the pound with EUR/GBP adding 0.23%, to hit 0.8429, but lower against the yen with EUR/JPY shedding 0.40%, to hit 118.82. The yen strengthened broadly after the Bank of Japan boosted its inflation target and committed to open-ended asset purchases in an effort to rid Japan of deflationary pressures. Later in the day, the euro group of finance ministers was to hold a second day of talks in Brussels, while the ZEW Institute was to release its closely watched index of German economic sentiment.
EasyForexNews Research Team