Investing.com - The euro moved fractionally higher against the U.S. dollar in Asian trade Wednesday, on optimism that European leaders were making progress in dealing with the region’s sovereign debt crisis.
EUR/USD hit 1.3670 in early Asian trade, the pair’s lowest since Monday; the pair subsequently consolidated at 1.3678, falling 0.01%.
The pair was likely to find support at 1.3500, Monday’s low, and resistance at 1.3937, last Friday’s high.
On Tuesday, German Chancellor Angela Merkel expressed confidence that rescue measures to address Greek debt were progressing, and rejected the notion that Greek bankruptcy would provide a quick solution to the euro-zone’s debt crisis.
"Everything that I hear from Greece is that the Greek government has hopefully understood the signs of the time and is now doing the things that are on the daily agenda," Merkel said in Berlin, ahead of a scheduled teleconference with Greek Prime Minister George Papandreou and French President Nicolas Sarkozy.
Europe was doing everything it could to “avoid disorderly processes” Merkel added.
Meanwhile, global investor Morgan Stanley said the euro will fall to USD1.25 by the first quarter of next year, lowering an earlier forecast.
"We believe that economic, political, constitutional and monetary policy developments in Europe have now become more challenging for the euro, while international support is likely to decline," Morgan Stanley said.
European shares ended the Tuesday session higher, with France’s CAC 40 adding 1.4% to 2,894.93, Britain’s FTSE 100 rose 0.87% to 5,174.25, and Germany’s DAX advanced 1.85% to end the session at 5,166.36.
Wall Street posted its second consecutive day of gains, as the Dow Jones Industrial Average gained 0.4% to 11,105.85, the Nasdaq Composite Index rose 1.5% to 2,532.15, and the S&P 500 climbed 0.9% to close at 1,172.87.
Meanwhile, the euro was lower against the British pound but up against the Japanese yen, with EUR/GBP down by 0.02% to hit 0.8666, and EUR/JPY gaining 0.03% to hit 105.26.
Europe’s Economic and Financial Affairs Council, Ecofin, was scheduled to hold discussions on the region’s debt challenges in Wroclaw, Poland later this week.