Forexpros – The euro pushed higher against the U.S. dollar in early Friday trade as word that euro zone inflation is under control and the European Central Bank may provide EUR470 billion in cash to the regions banks powered the single currency rally.
EUR/USD traded at 1.3424 during early U.S. trade up 0.38%, currently at the high of the session
The pair was likely to find support at 1.3558 today’s low and technical resistance exists at 1.3466, November 30 high.
The ECB may be tapped next week for EUR470 billion in three year funds for distribution on February 29, according to a Bloomberg survey. This is nearly the same amount that was provided in December.
This infusion of cash is expected to prolong the rally in the bond markets and will be used primarily to support the Italian and Spanish bond markets.
Euro zone inflation is in check and no floor exists under the 1% interest rate, ECB council member Erkki Liikanen told CNBC, calming fears of upside risk in the region.
Yesterday, the single currency rally was spurred when Germany posted better than expected business climate index figures. The Munich based Ifo institute’s business climate index climbed to 109.6 in February from 108.3 in January.
However, the European Commission changed its November economic growth forecast for 0.05% growth to a 0.3% contraction in the euro zone.
The EU expects the economy to shrink 1.3% in Italy and give back 1% in Spain.
Trying to ease the worry, European Union Economic and Monetary Commissioner, Olli Rehn stated, “Although growth has stalled, we are seeing signs of stabilization in the European economy. Economic sentiment is still at low levels, but stress in financial markets is easing.”
In Greek news, German Chancellor Angela Merkel stated she will keep the pressure on Greece to meet its debt cutting pledge as many remain skeptical of Greek’s true intentions.
Applications for jobless benefits in the U.S. were unchanged in the week ending February 18 at 351,000. This marks the fewest number of people on unemployment benefit rolls since 2008, signaling continued improvement in the world’s largest economy.
The euro was slightly lower against the pound and higher against the yen, with EUR/GBP easing down 0.02% to hit 0.8492 and EUR/JPY soaring 0.97% to hit 108.02.
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