Forexpros – The euro rallied against the yen on Wednesday, jumping more than 1%, supported by hopes for a plan to recapitalize European banks and avert a liquidity crisis in the euro zone.
EUR/JPY hit 105.81 during European morning trade, the pair’s highest since September 16; the pair subsequently consolidated at 105.63, surging 1.06%.
The pair was likely to find support at 104.00, Tuesday’s low and resistance at 106.56, the high of September 16.
Later in the day, European Union Commission head Jose Manuel Barroso was announce proposals to recapitalize European banks and improve economic governance in the single currency bloc.
Sentiment was boosted earlier after German Chancellor Merkel said she remained certain that plans to expand the powers of the region’s bailout fund would be ratified ahead of an EU summit on October 23.
Slovakia’s parliament rejected a plan to enlarge the European Financial Stability Facility on Tuesday, resulting in the collapse of the nation’s government. The outgoing government said earlier that a re-vote would go ahead as soon as Wednesday afternoon.
The euro was also sharply higher against the U.S. dollar, with EUR/USD leaping 1.1% to hit 1.379.
Also Wednesday, the U.S. Federal Reserve was to release the minutes of its most recent policy-setting meeting.
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