Investing.com – The euro erased losses against the U.S. dollar on Monday, following reports that Germany is set to abandon its opposition to combining the euro zone’s two bailout funds and after dovish remarks by the Chairman of the U.S. Federal Reserve.
EUR/USD pulled away from 1.3192, the session low, to hit 1.3311 during European early afternoon trade, rising 0.31%.
The pair was likely to find support at 1.3191, the session low and resistance at 1.3355, the high of March 1.
The euro found support following German media reports that Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble will support an initiative to combine the region’s two bailout funds, the European Financial Stability Fund and the European Stability Mechanism.
Euro zone finance ministers are to meet on Friday to discuss enlarging the region’s financial firewall by combining the EUR440 billion EFSF and the EUR500 billion ESM to give a total fund of EUR700 billion to fight the debt crisis.
The dollar also came under pressure after Fed Chairman Ben Bernanke said in a speech that further monetary accommodation is needed to bring about big gains in the U.S. jobs market, which he described as “far from normal”.
Sentiment on the single currency was hit earlier after Italian Prime Minister Mario Monti warned over the weekend that the threat of contagion from Spain could cause the debt crisis in the euro zone to flare up again.
Concerns over Spain overshadowed a report showing that German business confidence improved in March.
The Ifo Institute said earlier that its index of German business confidence inched up to 109.8, from a reading of 109.6 in February. Analysts had expected the index to ease up to 109.7 this month.
The euro was almost unchanged against the pound and extended gains against the yen, with EUR/GBP inching up 0.01% to hit 0.8361 and EUR/JPY advancing 0.72% to hit 110.07.
Later Monday, the U.S. was to publish industry data on pending home sales, while European Central Bank President Mario Draghi was to speak.
EUR/USD pulled away from 1.3192, the session low, to hit 1.3311 during European early afternoon trade, rising 0.31%.
The pair was likely to find support at 1.3191, the session low and resistance at 1.3355, the high of March 1.
The euro found support following German media reports that Chancellor Angela Merkel and Finance Minister Wolfgang Schäuble will support an initiative to combine the region’s two bailout funds, the European Financial Stability Fund and the European Stability Mechanism.
Euro zone finance ministers are to meet on Friday to discuss enlarging the region’s financial firewall by combining the EUR440 billion EFSF and the EUR500 billion ESM to give a total fund of EUR700 billion to fight the debt crisis.
The dollar also came under pressure after Fed Chairman Ben Bernanke said in a speech that further monetary accommodation is needed to bring about big gains in the U.S. jobs market, which he described as “far from normal”.
Sentiment on the single currency was hit earlier after Italian Prime Minister Mario Monti warned over the weekend that the threat of contagion from Spain could cause the debt crisis in the euro zone to flare up again.
Concerns over Spain overshadowed a report showing that German business confidence improved in March.
The Ifo Institute said earlier that its index of German business confidence inched up to 109.8, from a reading of 109.6 in February. Analysts had expected the index to ease up to 109.7 this month.
The euro was almost unchanged against the pound and extended gains against the yen, with EUR/GBP inching up 0.01% to hit 0.8361 and EUR/JPY advancing 0.72% to hit 110.07.
Later Monday, the U.S. was to publish industry data on pending home sales, while European Central Bank President Mario Draghi was to speak.