Forexpros – The euro rose against the dollar on Tuesday as hopes the eurozone will weather the debt crisis were revived when a European Central Banker expressed support for a banking union to cushion the continent’s financial system.
In Asian trading on Tuesday, EUR/USD was trading up 0.02% at 1.2500, up from a session low of 1.2492, and off from a high of 1.2506.
The pair was likely to test support at 1.2462, the low of May 29, and resistance at 1.2510, the high of June 4.
The euro rose on hopes policymakers will explore more ways to firewall the European debt crisis and eventually dowse it.
European Central Bank Governing Council member Ewald Nowotny said he supported the idea of a European banking union, which bolstered the euro.
Fears that upcoming Greek elections will usher in anti-austerity politicians and open the door to a Greek exit from the currency zone have hammered the euro as have Spanish financial concerns.
But comments out of Portugal earlier that the country’s EUR78 billion bailout program remains on schedule coupled with an announcement from the country’s Finance Minister Vitor Gaspar that Lisbon will pump EUR6.65 billion into the country’s banking system bolstered the currency as well.
Meanwhile, eurozone producer price inflation rates came in flat in April, below expectations for a gain of 0.2%.
The European Central Bank is due to hold monetary policy meetings later this week, and weak prices at the wholesale factory level sparked some talk that rate cuts were possible, which tempered the euro’s gains.
The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP up 0.04% at 0.8128 and EUR/JPY trading up 0.04% at 97.96.
Later Tuesday, the eurozone will publish data on retail sales, while Germany will publish data on factory orders.
In addition, Spain will hold an auction of government bonds.
In the U.S., the Institute for Supply Management is to release a report on non-manufacturing activity.
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