The euro inclined today against the U.S. dollar and the sterling pound ahead of the European summit, where markets are looking forward with hopeful eyes that leaders will provide comprehensive plan to overcome the debt crisis and aid Greece.
The EUR/USD pair opened at 1.3906, and recorded the highest at 1.3951 and the lowest at 1.3892, and is currently hovering around 1.3936.
The pound also lost strength against the euro today, where after the opening in Asia at 0.8689, the EUR/GBP pair set a high of 0.8721 and a low of 0.8673 and is trading now around 0.8716.
Leaders will focus on how to aid Greece, how important banks' recapitalization is and how to leverage the European Financial Stability Facility and use the expanded firepower to stop the debt crisis from worsening and deepening, and from expanding into larger economies within the zone, where leaders will attempt to provide further protection for the Italian and Spanish economies.
Markets are waiting for the results of the summit, where expectations in the market indicate that leader will be able to cure the debt crisis and will provide strong measures to empower banks and support indebted nations and prevent other weak economies from falling into the trap.
Moreover, eyes are focused on the mechanism of using the European Financial Stability Facility firepower, where a draft contained by Reuters showed that leaders will consider leveraging the rescue fund in terms of buying bonds of indebted nations and governments, while another option is that the rescue fund will be used to insure issued bonds by indebted nations.
The temporal optimism supported the euro to gain some strength against other majors; however, a disappointment from the leaders today could spread losses across the board and force downside pressures on the common currency.
On the other hand, the U.S. dollar lost strength against other major economies including the yen, the Swiss franc and the Canadian dollar, yet appreciated against the sterling pound, where the GBP/USD pair opened today at 1.6000 and reached a high of 1.6041 and a low of 1.5970 and is trading now around 1.5981.
Moreover, the U.S. dollar lost strength against the Japanese Yen, which scored new all-time record against the dollar today, indicating that the Bank of Japan could suddenly intervene in the market in order to control the rapid incline seen on the yen, which hurt the country's exports significantly.
Concerning the USD/JPY, the pair declined after starting the Asian session at 76.07, recording the highest at 76.15 and the lowest at 75.69, and is currently hovering around 75.85.
Finally, the U.S. dollar index (USDIX), which track's the dollar's movements against other major currencies, retreated to a low of 76.00 after setting the highest at 76.30, to currently trade around 76.11, noting that the index opening level was at 76.23.