SINGAPORE: The euro nudged higher against the dollar on Monday, helped by hopes that the European Central Bank will soon take action to ease the euro zone's sovereign debt crisis.
After hitting a one-month high a week ago, the euro remains supported by expectations that the ECB will put in place measures to lower crippling borrowing costs for countries such as Spain and Italy as soon as next month.
The single currency edged up 0.1 percent to $1.2290. The euro has gained some reprieve after falling to a two-year low of $1.2042 in late July, and hit a one-month high of $1.2444 last Monday on trading platform EBS.
"I'm not overly bearish on the euro," said Andrew Robinson, FX analyst for Saxo Capital Markets in Singapore.
"People are thinking that the steps that they are taking are slightly more constructive than they were in the past," he said, referring to measures that the ECB is now considering.
As long as technical support at its early August low near $1.2135 holds, the euro may yet re-test its recent one-month high and possibly rise above $1.2600 over the next two to three weeks, Robinson added.
The euro has seen a bounce over the past several weeks, with traders and analysts attributing the single currency's vigour to short-covering, or the unwinding of euro-bearish bets.
Underscoring this view, latest data from the US Commodity Futures Trading Commission shows that currency speculators continued to pare back their net short positions in the euro in the week ended Aug. 7, a period when the euro hit its one-month high.
Traders still seem to be looking for opportunities to sell the euro when it rallies, s aid a trader for a Japanese brokerage house in Tokyo.
"Still, speculation that the ECB might take some concrete measures is making it a little hard for the market to sell (the euro) too aggressively," the trader said.
ECB President Mario Draghi said earlier this month that the ECB may buy more government bonds, but only once countries had turned first to the euro zone's rescue funds for help and agreed to strict conditions.
The Australian dollar eased 0.1 percent to $1.0555, held back by investor concerns about a slowdown in global growth.
Last Friday, China reported weak trade and bank lending data that took the shine off high-flying commodity currencies such as the Australian dollar.
Still, the Australian dollar held near a four-month high of $1.0615 hit last week, underpinned by hopes that major central banks will soon act to stimulate their economies.
The US dollar held steady at 78.28 yen, holding above a two-month low of 77.90 yen hit in early August.
There was talk of dollar offers from Japanese exporters at levels above 78.80 yen, while stop-loss dollar offers were said to be lurking at levels below 77.50 yen.
Comments
Comments are closed for this article.