The European common currency continued its rally after taking a breather yesterday on hopes Greek debt-swap talks with private sector creditors are showing progress.
Eyes has turned once again on the Greek negotiations to see what will be the result of the discussions after yesterday's EU summit had a saw a signing of stricter budget rule agreement and the launch of the permanent European fund one year earlier.
The first-day meeting between the EU 27 leaders on Monday saw an agreement on tougher budget rules, where only Britain and Czech Republic refused to sign the fiscal compact which makes countries prone to sanctions in case of any breach of budget limits starting from March.
Also, European leaders agreed to launch the permanent European rescue fund, known as the European Stability Mechanism (ESM), in July this year instead of the same month next year to finance highly indebted nations in the region, yet there was no expansion in its 500-billion-euro capacity, where Merkel said discussions regarding this issue will be in the coming summit taking place in March.
Other discussions tackled key issuessuch as methods of promoting growth and alleviating unemployment. There is a plan to use 82 billion euros of unspent funds from the EU's 2007-2013 budget to help in creating new job opportunities, especially for youth. In addition, they talked about methods to enhance structural reforms for the job market and business regulations.
Regarding fundamentals, German unemployment retreated to 6.7% in January from 6.8%, while euro area jobless rate reached 10.4% in December, where the prior reading of 10.3% was upwardly revised to 10.4%, yet the news did not have much impact on the euro movements, where the euro is heading for the first monthly advance versus the dollar and yen since October.
Concerning the EUR/USD pair, it rose to trade around 1.3200, after recording a high of 1.3213 and a low of 1.3131.
The trading range for today is among key support at 1.2970 and key resistance at 1.3375.
The dollar index, which tracks the dollar movements versus a basket of major currencies, on the other hand, continued its downside direction that started by mid-January to touch a low of 78.80, compared with the day's starting level of 79.08.
As for the USD/JPY, it rebounded slightly after the three sharp declines over the past three sessions to trade around 76.35 after reaching a high of 76.41 and a low of 76.15, while the trading range for today is among key support at 75.20 and key resistance now at 77.30.
Moving to the GBP/USD pair, it continued its gains, following the general sentiment which boosted demand on high-yielding currencies, to hover around 1.5775 while recording a high of 1.5793 and a low of 1.5695, where the news did not affect the pair's movements.
The trading range for today is among key support at 1.5515 and key resistance at 1.5935.