Forex Intraday Round-up: The Euro Reaches Three-Weeks High Against US Dollar

on Nov 23, 2012

**EUR/USD Reaches Three Weeks High Supported by Upbeat German Business Confidence**

After trading in the mid 1.2700s on Monday, the euro has been steadily rising in the second half of this week and at 10.50 GMT was changing at 1.2896/97 or 0.08 percent higher than yesterday. The currency rose to its highest level against the US dollar in three weeks after data from the Munich-based Ifo Institute showed that German business confidence went up in November after six months of successive decline.

“The uptick in confidence is reasonably substantial and that’s constructive for Germany and for the euro area as a whole, keeping the euro relatively well-bid,” said Jeremy Stretch, head of foreign-exchange strategy at Canadian Imperial Bank of Commerce.
According to analysts at the bullish sentiment on the euro will not be easily subdued, considering how France’s credit rating downgrade by Moody’s was insufficient to curb the currency’s rise. Improvement in the Eurozone’s manufacturing sector additionally fuelled the rally despite reports showing that the bloc remains in contraction territory.

The EUR/USD managed to overcome the 1.2900 mark and climbed to a session high of 1.2916, before retreating to the 1.2890 level.
“The euro may temporarily gain further early next week on some kind of agreement [on the EU budget] but it will not be sustainable” opined Dereck Halpenny, European Head of Global Markets Research at BTMU. If breaking through the 1.2900 level, the EUR/USD is expected to face resistance at 1.2915, 2 November high of 1.2950 and 1 November high of 1.2983. If the pair drops below the 1.2827 level, support is seen at 1.2825 and the 19 November low of 1.2730.

**The Sterling Loses Ground Despite Increase in UK Mortgage Approvals**
At 12.20 GMT GBP/USD was trading in negative territory at 1.5930/33, close to its session low of 1.5927. Earlier in the trading session the pair climbed to 1.5942 and later reached a peak at 1.5968 but quickly lost ground. However analysts expect the GBP/USD to continue rising pushed by better than forecast UK Mortgage Applications data – a report by the British Bankers Association showed that mortgage approvals reached a nine-month high in October. The report shows that 33,039 households managed to get mortgages in November up from 31,544 in October and more than the Bloomberg survey forecast of 32,000.

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!m[The British Pound Dormant Ahead of UK GDP Revision, Weakness Forecasts in the Aussie](/uploads/story/886/thumbs/pic1_inline.png)If positive, a revised UK GDP number on Tuesday next week could take the British pound above the $1.60 mark. “The main figure driving the pound recently has been GDP. Revisions are due on Tuesday so if we see an upwards revision then $1.60 could very easily be taken out as a psychological barrier.” opined Lee McDarby, head of dealing on the corporate and institutional treasury desk at Investec Bank, as quoted by Bloomberg.
**The Australian Dollar Rises but Technical Analysis Predicts a Downward Slide**
The Aussie has been doing well today against the greenback, trading most of the time in positive territory. According to, liquidity has been light ahead of a reduced session on Wall Street. At 12.50 the AUD/USD was at 1.0408/10 after reaching a session high of 1.0418 due to increased risk appetite still fuelling the upside in the high-beta currencies.
Analysts at Commerzbank maintain their negative bias on the Australian dollar with the pair expected to slide back to 1.0315.

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