Forexpros – The euro rose against the dollar on Friday as the market digested conclusions of an EU summit, where member nations decided to move forward toughening fiscal policies even it meant somewhat isolating neighboring trading partner Great Britain.
EUR/USD hit 1.3380 during in mid-session U.S. trading, rising 0.30% and off from an earlier session high of 1.3434 while up after testing support at 1.3282 earlier in the day.
Support for the unit was seen at 1.3282, the session’s low and resistance at 1.3459, last Thursday’s high.
In Europe on Friday, most members of the 27-member European Union agreed to terms enforcing rules that punish those who run up deficits
All 17 countries that use the euro as their currency and another nine who want to threw their support behind the proposal.
Britain, a European country that doesn’t operate on the euro, said it would not agree to the summit’s proposals mainly due to financial terms they impose, including a financial transaction tax, which London sees as threatening to its markets.
European leaders also agreed to earmark 200 billion euros to the International Monetary Fund to help bolster European bailout facilities, which were once deemed big enough to help out countries like Greece but not enough to assist larger countries like Italy and Spain.
On top of that, a 500 billion euro European Stability Mechanism will take effect next year and aid countries alongside an existing but temporary 440 billion euro European Financial Stability Facility, thus serving as another shot in the arm to European economy.
The euro wobbled up and down as the market sought to figure how the initial agreements would translate into concrete action and results.
The euro was up against the pound, with EUR/GBP rising 0.17% to hit 0.8550.
In the United States, data moved the EUR/USD on top of events in Europe.
Washington reported that the country’s trade deficit narrowed a little more than expected in November.
A Bureau of Economic Analysis report said that U.S. trade deficit hit a seasonally adjusted $43.5 billion in October compared with a revised $44.2 billion in September.
The deficit fell in line with market forecasts, although the September revision was a little higher than expected.
Also in the United States, the University of Michigan consumer sentiment index rose more than expected in November.
The university said that consumer sentiment rose to a seasonally adjusted 67.7, from 64.1 in the preceding month.
In the United Kingdom, the government reported a trade deficit of 7.5 billion pounds, much lower than a forecast for a 9.5 billion pound trade gap.
U.K. producer price inflation input rose to a seasonally adjusted 0.1% last month from -0.8% in the preceding month.
Next week, the United States Federal Reserve will hold its Federal Open Market Committee meeting, where monetary policies will decide on the fate of U.S. benchmark lending rates.
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