Euro, dollar reaches 2-week peak but gains may fade

Fri Apr 20, 2012 2:16pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) - The euro was on pace for its best weekly performance since February on Friday after better-than-expected German business sentiment data, but gains may fade next week as Spain's finances and the French presidential election become the focus.

The euro also got a boost after a Group of 20 official said the G20 would pledge to increase the International Monetary Fund's resources by more than $400 billion to fight the European debt crisis.

Spanish 10-year government bond yields, however, topped 6 percent for a third time this week, which could keep the euro constrained within the $1.30-$1.32 range.

"There's a lot of talk about the IMF and the G20 and the possibility it will get increased resources," said Tom Fitzpatrick, chief technical strategist at CitiFX in New York.

But he warned of potential headwinds. "Decent price action on any given day doesn't in and of itself mean anything."

In mid afternoon New York trading, the euro was up 0.6 percent at $1.3214, having hit a two-week high of $1.3224 after setting off stops above $1.3209. For the week, the euro was up 1.1 percent, on track for its largest weekly gain since February 26.

Still, the euro is within its 3-week neutral range, and it would take a considerable move higher -- above $1.33 -- before the longer-term bear trend came into question, said analysts from TD Securities. "With this in mind, we look for selling opportunities in any squeeze higher," they said.

Germany's Ifo survey was the clear catalyst for the euro's earlier gains, with its business climate index rising to 109.9 in April versus a forecast of 109.5.   Continued...