Euro Climbs Despite Decline of Commodities

The euro continues to show an impressive performance as optimism about the ability of the European Union’s leaders to deal with the region’s financial crisis grows every day.

The size of the EU rescue fund may be increased as Angela Merkel, the Chancellor of Germany, admitted that she’ll go to any length to deal with the European problems.
Jean-Claude Trichet, the President of the European Central Bank, signaled that he may consider increasing the interest rates as the inflation expected to accelerate. For now, the ECB kept its benchmark repo rate unchanged at 1 percent.

The euro’s strength versus the US dollar also can be explained by the unexpected increase of the jobless claims in the US. The Dollar Index tumbled as much as 1.3 percent to 78.994. The decline of stocks and commodities has potential to hurt the euro, but for now the currency hasn’t reacted to this negative factor.

EUR/USD jumped from 1.3135 to 1.3355 as of 22:39 GMT today, while EUR/JPY surged to 110.53 from the opening price of 109.00 after it earlier fell to the intraday low of 108.68.

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