Stock Market Watch

Forex Market Update: Euro Steady against the Dollar

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The euro held steady against the U.S. dollar on Wednesday as buyers capitalized on recent dips after the single currency of the euro zone plunged to four-month low  in the previous session following Cypriot Parliament’s rejection of the terms laid down by euro zone finance ministers in lieu of a bailout.

Earlier on Tuesday, as expected, the Cypriot Parliament downrightly rejected Brussels’ proposal for taxing depositors, triggering concerns over possible default from the island nation and bank runs.

However, market analysts have played down concerns shown by the market participants, saying that policymakers will soon fix the problem and the debt crisis in Cyprus was minuscule compared to bigger problems encountered by the currency bloc (debt crisis in other peripheral economies of the euro zone).

On Wednesday, the euro edged up 0.1 percent at $1.2890, hovering near its 200-day moving average of $1.2876. In the previous session, the single currency of the monetary union slipped below the support to hit its four-month low of $1.28435 on EBS trading platform.

Although speculators prevented any further downfall of the euro as they took advantage of the dip, strategists, according to Reuters, believe that euro gains would remain capped and at most it could rise as high as $1.2980 while any uncertainty could pull it back towards $1.2700/$1.2660 level.

“The euro hasn’t fallen much lower after yesterday as markets in Europe are used to getting a solution at the very last minute, so it isn’t completely a risk off environment,” said Lutz Karpowitz, currency analyst at Commerzbank, according to Reuters.

Meanwhile, market participants will also keep an eye on the Federal Reserve’s policy rate statement, scheduled to be announced at 2:00 p.m. EST.

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edliston
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.

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.

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