The euro rebounded today, recovering the losses incurred in the past session, affected by the optimism that European leaders will be able to overcome the debt crisis, with eyes focused on the Slovak Parliament second vote on the expanded powers of the European Financial Stability Facility, especially after international inspectors explained that Greece could obtain the next tranche of 2010's bailout package in November.
Moreover, the U.S. dollar reversed sharply to the downside ahead of the Federal Open Market Committee (FOMC) Minutes today and also affected by the strengthening euro and other majors, awaiting the main bulletins discussed in the feds meeting, which could include further indications regarding the next steps to be taken by policy makers to support the sluggish growth in the world's largest economy.
In addition the euro was supported by the unexpected expansion in the industrial production index, which supported the slight optimism seen today to prevail, where the euro zone industrial production index for August expanded by 1.2%, while the annual index expanded by 5.3%.
The euro gained strength against the greenback after opening the session at 1.3638, where the EUR/USD pair after reaching a low of 1.3582 in the Asian session, rebounded to the upside during the European session to a high of 1.3815, and traded moments ago around 1.3765.
The U.S. dollar index (USDIX) slipped after starting the session at 77.67, to currently trade around 77.01 after reaching the highest at 77.92 and the lowest at 76.79.
On the other hand, the sterling pound gained strength against the weakening U.S. dollar despite the downbeat jobs report from the United Kingdom, which showed that unemployment climbed to 8.1%, the highest in 15 years. In addition, the claimant rate, which accounts for the terminated employees who are claiming jobless benefits while seeking job vacancies in the United Kingdom, surged to 5.0%, adding more pressures on the kingdom; however supporting the expansion of the quantitative easing seen by the Bank of England past week.
Concerning the GBP/USD, the pair advanced sharply during the Asian and European sessions, where after hitting a low of 1.5542, the pair rebounded to a high of 1.5784. The pair opened the session at 1.5575 and is trading now around 1.5735.
However, the royal currency fluctuated heavily against the euro, where the EUR/GBP pair after the opening at 0.8755, the pair recorded the highest at 0.8786 and the lowest at 0.8734, and is currently hovering around 0.8757.
The Swiss franc also gained sharply against the U.S. dollar, where after the USD/CHF opened at 0.9085 today, the pair recorded a high of 0.9110, but then reversed sharply towards a low of 0.8934, while it trades now around 0.8979.
Technical point of view: the pair is expected to extend the bearishness towards 0.8700 in the coming period, yet heavy fluctuations are possible. For interested in more technical analysis check the link below.