Euro Rebounds on Greece Improved Outlook

The euro rallied significantly versus currencies of its main trading partners today on speculations that the European Union will help Greece to end its financial crisis, affecting the single currency outlook in foreign-exchange markets in a positive way after weeks of pessimism.

The forecast for Greece’s budget deficit situation has improved significantly today before a EU summit to be held this week in which speculations suggest that other bloc’s members like Germany will propose a bail out for Greece if the southern country manage to implement the necessary domestic measures to avoid the crisis to deepen. The euro profited from improved confidence triggered by eventual help coming towards Greece and had a considerable advance versus the U.S. dollar and the Japanese yen, which were the biggest gainers from a decline in attractiveness for assets in the Eurozone. The euro also advanced versus the British pound, but couldn’t sustain its rally versus the sterling for as long as it did versus other currencies.

These week’s positions to be taken by the EU and the ECB towards Greece will be certainly determinant regarding the euro price in the short-term, as lack of support from international institutions is one of the main negative factors towards the Greek crisis and its consequences for the euro. If other EU members announce a plan to help the nation, the euro is likely to rebound further.

EUR/USD traded at 1.3774 as of 20:00 GMT from a previous rate of 1.3676 yesterday. EUR/JPY traded at 123.48 from 121.89.

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