Forexpros – The euro firmed against the dollar on Friday, buoyed by a successful turnout at an Italian bond auction coupled with surprisingly strong German confidence numbers.
In Asian trading on Thursday, EUR/USD hit 1.3462, up 0.67%, gaining from a session low of 1.3358 and off from a high of 1.3476.
The pair was likely to test support at 1.3232, Thursday’s low, and resistance at 1.3476, the earlier high.
On Thursday, German research institute Ifo reported that its Business Climate Index rose to 109.6 in February from 108.3 in January, beating out expectations for a gain to 108.8.
The reading fueled sentiment that Europe’s largest economy is moving farther along the road to economic recovery.
Meanwhile yields fell in an Italian government bond auction amid heavy turnout, which fueled even more appetite for risk.
The European Central Bank is scheduled to arrange EUR470 billion in three-year funds for the continent’s financial institutions in the coming days, a move designed to pump liquidity into the economy and ease a credit crunch, which further bolstered the euro on grounds that the easing move will ultimately boost confidence.
The cash injection should prolong optimism in Italian and Spanish bond markets.
Meanwhile, German and British gross domestic product growth figures remained in line with market expectations.
Measures taken in Japan to reverse the yen’s strengthening trend also bolstered the euro.
The euro was down against the pound and up against the yen, with EUR/GBP losing 0.03% to 0.8492 and EUR/JPY up 1.65% at 108.74.
A G2 meeting of finance ministers and central bankers is taking place, and talk of measures to contain the European debt crisis could resonate in currency markets.
On Monday, the Gfk German Consumer Climate Index will be released, as will U.S. pending home sales.
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