27th October 2011
The euro has overcome the scepticism of recent weeks to rally to a seven-week high following the announcement of a new deal to tackle eurozone debt.
Leaders of the EU nations met yesterday (October 26th) to discuss measures to tackle the ongoing issues in the region, with an agreement being made for a 50 per cent writedown of private bond holders of Greek debt having a dramatic impact on the single currency in forex trading.
In addition, leaders agreed to provide recapitalisation for European banks in a bid to scale up the eurozone bailout fund.
As a result, the euro has risen by one per cent against the dollar to $1.4038, with further gains possible up to $1.4050.
"The package got a few more numbers in it than many had expected," Paul Robson, currency strategist at RBS Global Banking, told Reuters. "The market was short risk and long dollars, so this has boosted the euro."
Earlier this week, the dollar dipped in forex trading due to uncertainty that European leaders would be able to effectively tackle the debt crisis.
Posted by Andrew Johnston
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