Forexpros – The euro gained against the greenback on Tuesday, correcting upward after a selloff stemming from European Central Bank President Mario Draghi’s weekend refusals to intervene in the debt crisis showed signs of easing.
EUR/USD hit 1.3011 in early Asian trading, up 0.10% after briefly hitting a session high of 1.3015 and well above a session low of 1.2994.
The pair was likely to find support at 1.2983, Monday’s low, and resistance at 1.3041. Monday’s high.
Over the weekend, Draghi reiterated his opposition to buying government bonds to alleviate the crisis on the grounds that such monetary policy moves go against the central bank’s mandate of keeping prices stable.
Draghi also told the Financial Times that should countries flirt with the idea of defaulting on their debts and abandoning the euro, they risk a fate worse than working their way through the crisis via austerity and paying down debts while sticking with the currency.
“Leaving the euro area, devaluing your currency, you create a big inflation, and at the end of that road, the country would have to undertake the same reforms that were due to begin with, but in a much weaker position,” Draghi told the Financial Times.
“When one starts with this you never know how it ends really.”
The euro weakened on Draghi’s comments but later firmed amid a slight correction, although the threat of downgrades on the part of the Fitch Ratings agency kept the correction muted.
Fitch recently said it may downgrade several countries next year, including stripping France of its coveted AAA rating.
The euro, meanwhile, dipped against the pound, with EUR/GBP falling 0.08% to trade at 0.8380.
On Monday, the U.K. Nationwide Consumer Confidence numbers came in at 40 points for November, better than a forecast for 34 points and above 36 points in October.
Later Tuesday, the German Ifo Business Climate Index will publish, gauging the current German business climate and expectations for the next six months.
In the U.S., data on housing starts and building permits will shed light on the housing industry, which helped throw the U.S. into its recent recession and continues to dampen its recovery.
Meanwhile in Japan, the Bank of Japan will announce its latest decision on interest rates.
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