Forexpros – The euro firmed against the dollar Friday as investors eased up in their flight to the safety of the U.S. greenback.
Fears of European downgrades and general uncertainty in recent sessions coupled with growing sentiment that the U.S. will avoid both recession and serious inflation sparked a flight to the safety of the dollar.
On Friday, however, appetite for risk returned, plus many investors snapped up euro seen at attractive prices.
EUR/USD hit 1.3024 during in midday U.S. trading, up 0.06%, firming after a session low of 1.3004 and easing off a session high of 1.3084.
The pair was likely to find support at 1.2957, Thursday’s low, and resistance at 1.3048, an earlier Friday high.
In the U.S., inflation rates came in flat for November, with the Labor Department reporting that the unchanged consumer price index came in below market expectations for 0.1% growth.
Bloomberg, meanwhile, quoted Luxembourg’s Jean-Claude Juncker, head of an E.U. group of finance ministers, as saying policymakers will meet a Dec. 19 deadline to arrange loans to the International Monetary Fund as part of a crisis-fighting package firmed the euro as well.
The euro, meanwhile, strengthened against the pound on Friday as well, with EUR/GBP rising 0.14% to trade at 0.8402.
The session follows a volatile week for foreign-exchange trading, although market watchers said Friday’s rebound might not last long.
“Overnight, we saw a little bit of a rebound in the euro, basically some profit-taking and positioning ahead of the weekend,” said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington, according to Reuters.
“But ultimately I think the story is a negative one for the euro and that will continue to play itself out over the week ahead.”
European Central Bank President Mario Draghi was due to speak later in the day.
Draghi has insisted further monetary policy measures are not the right tools to help Europe combat the debt crisis but rather, governments must rely on emergency funds made available to them as well as make tough decisions to right their ailing economies.
Markets will also keep an eye out on ratings agencies, which have threatened to downgrade European nations in 2012 due to the debt crisis.
High-ranking Federal Reserve officials were expected to be in public later in the day, including Charles Evans, head of the Fed’s Chicago branch and Richard Fisher, head of the Dallas branch, days after the U.S. central bank said it was sticking with policies, for now.
Trading should temper in the coming days ahead of the Christmas holidays in both the U.S. and in Europe.
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