Forexpros – The euro slid against the dollar on Thursday, erasing earlier gains on cautious optimism that European leaders will agree on a way out of the debt crisis at a Brussels summit over the next two days despite rumblings out of Germany to the contrary.
EUR/USD hit 1.3399 during early Asian trading, dipping 0.10% and down from an earlier session high of 1.3453 and up from a low of 1.3352.
Support for the unit was seen at 1.3334, Wednesday’s low, and resistance at 1.3550, last Friday’s high.
Later this week, European Finance Ministers will convene in Brussels and work out an initial agreement struck by France and Germany to apply more rigorous fiscal discipline on eurozone members.
Markets have heard plans from policymakers in the past before, only to see debt and default scares return and rattle stock, bond and forex markets in Europe and across the world.
This time, however, optimism has remained throughout recent trading sessions, and even warnings from the U.S. Standard & Poor’s ratings agency that 15 eurozone countries were at risk for downgrades over the crisis fueled market sentiment that such notice would motivate policymakers to take tough steps and solve the problems gripping the continent’s economy.
Talk, however, hit newswires earlier that German officials had grown skeptical that a deal would be reached at the upcoming summit, although markets are waiting for an official comment, especially after reports that G20 nations were planning to whip together an aid package for Europe via IMF financing were shot down on Wednesday in U.S. trading via IMF denials.
Meanwhile, strong weekly mortgage applications in the U.S. beefed up the greenback.
The Mortgage Bankers Association said applications jumped up 12.8% up from a decline of 11.7% during the previous week.
The euro was flat against the pound, with EUR/GBP down 0.01% at 0.8535.
The U.S. government is set to release initial jobless claims later on Thursday, which measures the number of people filing for unemployment insurance for the first time during the past week.
Despite massive stimulus measures carried out by the Federal Reserve and the Obama administration, unemployment rates have remained high since the U.S. officially emerged from its recession back in 2009.
The Bureau of Labor Statistics recently reported that unemployment rates fell to 8.6% in November from 9.0% in October although part of the decrease was not due to a surge in hiring but rather, due to a shrinking labor forces, as many people out of work quit looking.
Meanwhile, the European Central Bank is widely expected to cut interest rates by 25 basis points to a record low of 1%.
Forexpros
