Yahoo Finance Euro Extends Recovery as Italian Fears Ease
Investing.com - The euro moved higher on Thursday, building on the previous days strong gains amid optimism that the political impasse gripping Italy can be resolved without fresh elections.
EUR/USD rose 0.2% to 1.1686 by 03:26 AM ET (07:26 AM GMT), extending its recovery from Tuesday’s ten-month lows of 1.1509.
The single currency was boosted amid fresh attempts by the anti-establishment Five Star and Lega parties to revive their coalition plans, which eased fears that repeat elections could give a mandate for the country to exit the euro zone.
Italian bond yields fell back after they spiked higher on Tuesday, but investors remained cautious as political risk in the euro area remained elevated. In Spain, Prime Minister Mariano Rajoy is facing a vote of no confidence in the government on Friday.
Also Friday, the EU’s temporary exemption from the U.S. steel and aluminum tariffs is due to expire, and there are also ongoing concerns about a trade spat between the U.S. and China, as well the situation in North Korea.
Investors were also looking ahead to euro zone inflation data later in the day, after Wednesday’s higher than expected inflation figures from Germany added to the problems facing the European Central Bank as it debates unwinding its stimulus program.
The euro was a touch lower against the traditional safe haven yen, with EUR/JPY last at 126.93 after climbing 1.04% on Wednesday.
The dollar was lower against the yen, with USD/JPY sliding 0.27% to 108.62, moving back towards Tuesday’s five month lows of 108.10 as risk aversion underpinned the Japanese currency.
The pound pushed higher, with GBP/USD adding on 0.2% to trade at 1.3313 after hitting a six-month low of 1.3203 on Tuesday, pressured lower by political risk in the euro zone.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.17% to 93.89, pulling further away from Tuesday’s seven month highs of 94.98.
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