Euro exchange rate finds support today as 'tiny steps towards fiscal ties' are noted

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Published on Tuesday, 28 August 2012 16:14

Written by Sam Coventry

International Money Transfers at our sister site

A review of the performance of the single currency at the closing of European markets on Tuesday afternoon.

The euro (Currency:EUR) has built up a head of steam against the majority of key global currencies on news of a working group to evaluate closer fiscal, banking and monetary union ties within Europe, which supports the view that Germany and France want to cooperate as long as there is a framework to do so.

The euro dollar exchange rate is 0.5 pct higher at 1.2561 at 17:10 in London.


The euro pound exchange rate is 0.3 pct higher at 0.7937.

The euro Australian dollar exchange rate is 0.37 pct up at 1.2095. 

"EUR is testing its multi-month highs, having rallied 0.4% since yesterday’s close. The 100-day moving average of 1.2601 looms as resistance and with significant event risk over the next two weeks the most important pressure on EUR is likely ongoing short covering," says Camilla Sutton at Scotiabank.

As mentioned though, the most important news today is that German and French finance ministers are in the early parts of establishing a working group to evaluate the paths towards a banking, fiscal and stronger
monetary union in Europe.

French President Hollande also went so far as to say that Europe needs to move towards a fiscal union that includes the mutualisation of debt.

"This is our base case, though we believe the road towards it will be a difficult and volatile one for the currency," says Sutton.