The euro rebounds ahead of European finance ministers' meeting

 @ibtimes on May 21 2010 7:44 AM

The 16-nationcy advanced for the third day against the dollar ahead of EU officials meeting today where they will introduce new policies to contain the debt crisis prevailing in European nations. The euro achieved the highest weekly gain in eight months versus the greenback on speculation an intervention might be seen to halt the excessive decline for the 16-nation currency.

On the other hand, the dollar index, which tracks the dollar movements versus a basket of major currencies, plummeted to 85.90, after breaching strong support at 85.95, from the day's opening at 85.93.

With regard to the euro-dollar pair, it inclined for the third day after the euro had rebounded from the lowest level in four years against the dollar reached this week. The breach of resistance at 1.2450 level paved the way for the pair to incline to 1.2490 where it is currently traded.

EU officials will meet today to put new measures after the $1 trillion bailout plan unveiled last week to improve the fiscal situation in the euro area. The German finance minister will outline a plan to prevent the Greek agony from occurring in other euro-area nations, specially after the unilateral move by German to stave off some of the speculation by banning naked short selling on some securities.

Earlier today, the pair reached a high of 1.2499 and a low of 1.2453, while for the rest of the day, the pair is predicted to move between support and resistance at 1.2430 and 1.2550 respectively.

As for the sterling-dollar pair, it fell to 1.4338 where it is doing several attempts to stay below the support at 1.4338. Today's news showed the sovereign deficit declined in April better than estimation, but still the debt is the highest for April since compiling data for the first time in 1993.

The British government has to cut the deficit without hurting recovery that started to gather momentum. Now, the pound is trading near the lowest level in 13 months versus the greenback, after recording a high of 1.4473 and a low of 1.4316, whereas it is expected to move between support at 1.4250 and resistance at 1.4445.

Relative to the dollar-yen pair, it is moving south over daily basis for the fourth day after breaching the support at 90.34. The pair is currently trading at 89.33 after hitting a high of 90.47 and a low of 89.02, while support is seen at 88.70 and resistance is at 90.00.

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