The euro pared its earlier losses versus the dollar after a successful Italian bond selling which saw a drop in borrowing cost, thereby providing further clues debt crisis is easing.
The Italian government sold 2.82 billion euros of the zero-coupon 2014 notes with a decline in yield to 2.352%, the lowest since November compared with 3.013% at a previous auction held in February. Also, the Treasury sold 1 billion euros of inflation-linked debt maturing in 2019 and 2021 where yields recorded 3.06% and 3.45% respectively.
At the meantime, there is improvement in the sentiment on hopes the euro area is on the right track towards resolving debt crisis after granting Greece with a second bailout, ECB injected more money to banks to boost liquidity and on expected expansion in European lifeline which would provoke similar expansion in IMF sources up to $1 trillion to combat crisis.
Yesterday, German IFO business climate for March rose to 109.8, the highest in eight months, exceeding expectations of 109.6 and a revised of 109.7, while Italian consumer confidence also surged to eight-month high to 96.8 this month from 94.4 in February.
In addition, Germany announced it is ready to boost European firewall to prevent the spread of debt contagion, before a two-day meeting for euro area finance ministers on March 30-31 which will decide whether there will be an agreement over boosting the size of the European fund to 940 billion euros, through combining the powers of both the EFSF (440 billion euros) and the ESM (500 billion euros).
Currently, the EUR/USD pair is trading around 1.3357, after getting support near SMA 100 level at 1.3200 on Friday to rebound for two consecutive sessions, where it pared earlier drop today when it fell to a low of 1.3325 while the high was recorded at 1.3385.
The trading range for today is among key support at 1.3180 and key resistance at 1.3550.
On the flip side, the U.S. dollar snapped its earlier advance against a basket of major currencies on the daily basis, where the dollar index is currently hovering around 78.90 near the day's opening, where the breach of support around 79.30 which represents SMA 100 level paved on Friday the way for the decline.
The greenback fell sharply yesterday against majors after Fed's Chairman Ben Bernanke said accommodative monetary policy is necessary to spur growth and boost employment, referring that QE3 is still possible despite the recent improvement in U.S. data.
Against the yen, the greenback is currently trading near the day's starting level around 82.80 after recording a high of 83.03 and a low of 82.362.
The trading range for today is among key support at 81.50 and key resistance now at 84.15.
Later in the day, eyes will focus on U.S. housing and consumer confidence data.
Finally, the British pound also is trading near the day's opening level around 1.5970, while the high was recorded at 1.5997 and the low was seen at 1.5940, amid the absence of fundamentals from the United Kingdom.
The trading range for today is among key support at 1.5730 and key resistance at 1.6165.