Forex - EUR/USD climbs on Greek bailout deal, confidence

Investing.com - The euro advanced against the U.S. dollar Tuesday, as the approval of the Greek bail out deal and climbing German consumer confidence increase risk sentiment in the euro zone.

EUR/USD pulled back from 1.3469, the session high, to hit 1.3457 in mid U.S. trade, surging 0.45%

The pair was likely to find support at 1.3356, last Friday’s low and resistance at 1.3485, Friday’s high and a 12-week high.

Sparking the euro rally, German Chancellor, Angela Merkel won a parliamentary vote to provide Greek aid after the close of trading Monday.

Merkel warned policy makers that pushing Greece out of the euro zone risked “incalculable” damage.

However, Greece’s credit rating was slashed to selective default by Standard & Poors after the island nation negotiated the biggest national debt restructuring in history.

The European Central Bank will allocate cash from its long term refinancing fund tomorrow. It is expected to provide EUR470 billion of three year cash to help stabilize the euro zone.

Consumer sentiment is on the upswing in the euro zone region. An index of executive and consumer sentiment in the 17 nation group climbed for a second month in February to 94.4, beating analysts’ expectations of a gain to 94.

In addition, German consumer confidence is expected to increase to a 12 month high in March due to declining unemployment, according to GfK SE.

Meanwhile, in the U.S., durable goods orders plummeted 4%, whereas economists were expecting a 1% decline, adding to the single currency’s appeal.

However, another report showing that U.S. consumer confidence climbed to the highest level in a year during February, counteracted the bearish durable goods numbers.

A separate report showed that U.S. home prices fell more-than-expected in December, declining for the 18th consecutive month.

Euro sentiment remained supported as investors looked ahead to Wednesday's launch of the European Central Bank’s second three-year long-term refinancing operation, after a similar cash injection in December averted a credit crunch and eased pressure on euro zone bond markets.

In other news, Portugal’s finance minister said earlier that his country had passed the third review of its EUR78 billion bailout by the troika, which is composed of the ECB, EU and International Monetary Fund, and added that the country’s fiscal targets for 2012 would be met in spite of deteriorating domestic economic conditions.

The euro was higher against the pound and the yen, with EUR/GBP easing up 0.09% to hit 0.8474 and EUR/JPY climbing 0.30% to hit 108.32.