EUR - Euro Rallies Following Strong Debt Sales in Portugal, Spain and Italy

The euro advanced against all its major currency counterparts during last week's session. The euro strengthened the most since May 2009 against the U.S. dollar, gaining about 580 pips in a week. The euro also gained about 400 pips against the Japanese yen, and about 200 pips against the British pound.


The euro strengthened last week after auctions of Portuguese, Spanish and Italian debt generated more demand than expected. Those nations are considered to be at risk to seek financial bailout in the future due to the ongoing sovereign debt crisis. The strong debt sales have boosted demand for euro, as it enhanced investors' confidence regarding the stability of the 17-nation currency. In addition, Germany's Chancellor Angela Merkel provided further support for the euro, after pledging to do whatever is necessary to ease the sovereign debt crisis.

It currently seems that the market is showing signs of renewed confidence in the euro-zone's economies, and as a result in the euro itself. Considering the somewhat surprising turn of events, large volatility could be expected in euro-trading in the near future, which will provide forex traders opportunities to see unusual profits.

Looking ahead to this week, a batch of data is expected from the euro-zone. Special attention should be given to the German ZEW Economic Sentiment and the German Business Climate reports as these are likely to have a large impact on the euro. Traders should take under consideration that if the major reports will fail to reach expectations, the euro may erase its profits from the past week.