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Forexpros – The euro moved higher against the U.S. dollar in early trade Friday, as European finance ministers debated how to add additional firepower to the rescue fund aimed at preventing the region’s debt threats from spinning out of control.
EUR/USD hit 1.3900 in early U.S. trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.3890 gaining 0.79%.
The pair was likely to find support at 1.3583, last Wednesday’s low, and resistance at 1.3914, Monday’s high.
Finance ministers from the euro-zone’s 17 nations convened in Brussels Friday to discuss boosting the current USD607 billion European Financial Stability Facility, but a rift remained between Germany and France on how best to maximize the fund’s impact.
France has pushed for the use of additional money to come from the European Central Bank, while Germany argued that such a move would violate an EU treaty prohibiting the financing of governments.
“We will stick to the situation as it is in the treaty, that the central bank is not available for state financing,” German Finance Minister Wolfgang Schaeuble said before Friday’s meeting.
Last week officials from both countries set Sunday as a deadline for formulating a plan, but announced adding a second meeting next Wednesday to formally outline details of an agreement.
Meanwhile, European Commissioner for Economic and Financial Affairs, Olli Rehn, said Friday that Greece would be receiving its next tranche of aid in November, provided that the Greek Parliament passes a savings and reform package as promised.
In afternoon trade, European shares moved sharply higher with France’s CAC up 2.49% to 3,160.74, Britain’s FTSE 100 rose 1.77% to 5,480.18 and Germany’s DAX climbed 2.96% to 5,936.98.
In morning U.S. trade the Dow Jones Industrial Average was lifted 1.83% to 11,752.50, the Nasdaq Composite Index gained 1.51% to 2,637.89, and the S&P 500 added 1.61% to 1,234.95.
Meanwhile, the euro was lower against both the British pound and the Japanese yen, with EUR/GBP down by 0.26% to hit 0.8703, and EUR/JPY lower by 0.08% to hit 105.73.
Finance Ministers from all 27 European countries were set to join euro-zone ministers in Brussels on Saturday, followed by the additional summit on October 26.
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