Forex Market Update: Euro Edges Up, Yen Falls

The euro gained traction against the U.S. dollar on Wednesday after the International Monetary Fund (IMF) confirmed the term and conditions under which the Cyprus will get $10 billion in financial aid from the troika [International Monetary Fund (IMF), the European Central Bank (ECB) and the European Union (EU)].

The euro hit an intra-day high of $1.2839 against the dollar following the conformation before retreating to $1.2833 by 9:30 a.m.  EST.

Earlier today, IMF Managing Director Christine Lagarde said the fund would offer financial assistance of euro 1 billion ($1.28 billion) over the course of next three years as part of Cyprus’ €10 billion bailout plan, approved last week, averting the financial meltdown in the island nation.

The confirmation eased the nerves and lifted the euro which was rather steady in Asian trading hours as market participants wait for the ECB’s policy rate statement on Thursday.

Disappointing economic data release from the currency bloc failed to hurt the euro though. According to Eurostat, the Consumer Prices Index (CPI) in the euro zone climbed at its slowest pace in March with annual inflation rate rising to 1.7% down from1.8% increase in the previous month. CPI in March rose by 2.7%.

Meanwhile, the yen edged down against the U.S. dollar amid rising expectations that the Bank of Japan (BOJ), which started its two-day policy rate meeting on Wednesday, would announce more monetary easing measure to stimulate the economy. BOJ’s new governor, Haruhiko Kuroda who is known to keep a very dovish stance, is expected to announce open ended bond purchase program and extension of bond maturities.

At around 9:45 a.m. EST, yen fell 0.30% to trade at 93.15 against the dollar.

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Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.