Euro Scraps Rally as Optimism Wanes

The euro rallied today on speculation that the European Central Bank will increase its interest rates even as the threat of the sovereign-debt crisis persists. The optimism quickly waned, though, and the currency experienced a sharp drop.

The euro was gradually rising today as the policy makers of the European Union agreed on May 6 to reconsider term of the bailout for Greece. The economic data was also favorable as the German trade balance surplus increased from €11.3 in February to â‚¬15.2 in March, rising by 35.1 percent. The positive news, apparently, weren’t enough to support the upside momentum and the euro erased its gains, quickly falling below the opening rate.

EUR/USD rallied from 1.4361 to 1.4440 before it retreated and traded at 1.4324 as of 13:09 GMT today. EUR/JPY fell from 115.80 to 115.47 following the jump to 116.48.

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