This week looked good for the euro as Forex traders felt a little less concerned about the situation in Europe, but then Standard & Poor’s came in and spoiled traders’ mood.
The euro looked good for the most part of the week. Meetings of European leaders and officials of the International Monetary Fund spurred optimism that was further supported by falling yields on European bonds. The European Central Bank provided a major boost for the shared 17-nation currency refusing to cut interest rates and speaking about stabilization of the European economy.
Pragmatic traders weren’t caught by the general optimism and were wondering when the happiness will end. As it turned out, they hadn’t to wait long as S&P spoiled what looked to be a good week for euro bulls. Credit rating cuts were anticipated for some time, but they hit the market hard anyway.
The euro was rallying against the pound this week, but the Friday move after the S&P rating cuts greatly reduced gains. Gains versus the dollar and the yen were lower and were completely erased by the Friday drop.
EUR/USD ended the week at 1.2673, down from the opening rate of 1.2693, while during the week it climbed to 1.2877. EUR/JPY advanced from 97.62 to 98.80, but retreated to 97.53 by the end of the week. EUR/GBP gained from 0.8227 to 0.8270, while the weekly high was 0.8374.
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