The Euro strengthened in overnight trading on Tuesday as the Japanese government has decided to purchase almost 20 percent of bonds of European rescue fund plans to raise finances for Ireland\u2019s bailout.<\/p>\n
The Euro reached its high of 1.2992 versus the US dollar after the news of Japan\u2019s decision however later settled around $1.2930 in overnight market. The pair EUR\/USD is likely to find support around 1.2794 whereas resistance is likely to be seen around 1.3072 on basis of its 200-day simple moving average.<\/p>\n
The Euro also advanced against the Japanese Yen to 107.50 after as compared to it four month low of 106.83 on Monday\u2019s trading session. Japanese Finance Minister Yoshihiko Noda disclosed that Japan will utilize its euro cash reserves to purchase the European bonds which triggered fresh buying in the single currency in overnight market. Japan currently has total foreign currency reserves of $1 trillion, currency composition of which is still unknown.<\/p>\n
Head of currency strategy Jeremy Stretch from CIBC World Market commented, \u201cThe Japanese are not going to recycle other parts of their reserves into buying euro debt. They want to keep up with the credit curve by continuing to invest in triple-A debt.\u201d<\/p>\n
The Euro also surged 0.2 percent versus the Swiss Franc to 1.2530 on the positive news. However most of analysts and experts still recommended sell on the single currency due to increasing sovereign debt crisis in the euro zone.<\/p>\n
The dollar index DXY which measures the greenback performance versus its six major rivals advanced 0.2 percent to 81.028 while the US dollar gained 0.4 percent to 83.11 against the Japanese Yen in Asian trading session.<\/p>\n