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EUR/USD fell to two-week lows on optimism over US debt deal

eurodollarThe euro lost positions against the US dollar on Tuesday, falling to its lowest point in two weeks, due to optimism that Senate leaders in the United States will resolve the fiscal standoff and avert a potential default.

EUR/USD slid to a session low at 1.3480 at 10:45 GMT, also the pairs lowest level since September 30th, after which consolidation followed at 1.3493, falling 0.51% for the day. Support was likely to be found at September 30th low, 1.3478, while resistance was to be met at the current session high, 1.3571.

The latest progress on the debate regarding the US debt ceiling facilitated the increase in demand for the US dollar. “The dollar seems to be deriving some support against the other major currencies as investor expectations rise that an agreement might be in the offing to raise the debt ceiling,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, cited by Bloomberg. “The dollar will underperform against the higher-yielding currencies as risk sentiment improves.” The approached agreement would suspend the US debt ceiling through February 7th 2014, provide government funding through January 15th and also require a House-Senate budget conference by December 13th, according to an anonymous Senate source familiar with the debates.

Meanwhile, the euro began its slide against the greenback with the release of the current situation indexes for Germany and the Euro zone by the Zentrum für Europäische Wirtschaftsforschung (ZEW). The outlook over the current situation in Germany worsened slightly in October, as the corresponding index dropped 0.9 points to reach a value of 29.7. On the other hand, the index of economic sentiment for Germany rose 3.2 points to reach 52.8 in October, marking its highest level since April 2010. The all-time average value of this index was 23.9. ZEW officials suggested that optimism among investors and experts over German economic development remained intact and the current fiscal crisis in the United States has not yet caused influence upon sentiment.

The economic sentiment index for the Euro zone advanced to a reading of 59.1 in October from 58.6 in September, while the index of current situation fell to -60.9 in October from -59.7 during the preceding month.

Elsewhere, the dollar pushed higher against the British pound as well, with GBP/USD hitting a session low at 1.5916 at 10:45 GMT. Ultimately, the euro was losing ground against the pound and the yen. EUR/GBP cross fell 0.21% on a daily basis to trade at 0.8468 at 12:06 GMT, while EUR/JPY pair tumbled even more, 0.61% to trade at 132.88 at 12:06 GMT. is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover Forex, Price Action and Social Trading.

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