Euro is gaining ground today, heading higher as Ben Bernanke’s testimony to Congress gets under way. Expectations of loose monetary policy in the United States are helping the euro today.
Even though Federal Reserve Chair Ben Bernanke is likely to share optimism about the economy while testifying before Congress, there are enough doubts about inflation and the speed of the economic recovery that the loose monetary policy is expected to continue.
While the ECB has cut rates, and may cut rates again, the eurozone has yet to engage in quantitative easing, so the euro remains somewhat strong against the dollar. Euro is also strong against the UK pound, thanks in large part to the disappointing retail sales data out of the United Kingdom.
So, even though credit agencies are warning that there could be more downgrades for debt-ridden eurozone countries, the euro is still retaining some of its strength today. Indeed, there is also an element of risk appetite helping the situation, since stocks are heading higher and there seems to be a demand for riskier assets. Gold is also gaining, which helps EUR/USD.
At 14:17 GMT EUR/USD is up to 1.2980 from the open at 1.2905. EUR/GBP is up to 0.8582 from the open at 0.8515. EUR/JPY is up to 133.5020 from the open at 132.2895.
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