Forexpros – The euro added to early gains against the U.S. dollar on Wednesday, as market sentiment strengthened amid hopes that European leaders may make progress on tackling the euro zone debt crisis at this weekend’s summit.
EUR/IUSD hit 1.3868 during European late morning trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.3850, advancing 0.71%.
The pair was likely to find support at 1.3724, Monday’s low and short-term resistance at 1.3913, Monday’s high and a one-month high.
The euro found support amid hopes that Sunday’s European Union summit could result in a breakthrough in dealing with the region’s financial crisis after German Chancellor Angela Merkel said the summit will mark an important step in resolving the region’s debt woes.
On Tuesday, the Guardian newspaper reported that Germany and France had agreed to enlarge the euro zone’s bailout fund to EUR2 trillion ahead the summit, but the report was subsequently denied by European Union officials.
Investors remained cautious after ratings agency Moody’s downgraded Spain’s sovereign debt rating by two notches late Tuesday and said it was maintaining a negative outlook on Spain’s rating to reflect the “downside risks from a potential further escalation of the euro area crisis.”
The announcement came one day after Moody’s placed France’s triple-A credit rating on review.
The euro was also higher against the pound, with EUR/GBP rising 0.13% to hit 0.8763.
Later Wednesday, the U.S. was to publish government data on building permits, housing starts and consumer price inflation.
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