Risk Appetite Drives Euro Higher

The Euro managed to find some legs overnight with improving risk appetite driving the EURUSD to highs of 1.4455 (see hourly chart). Official statements out of the Euro-zone stated that there were signs that the recession were beginning to end but a double-dip risk still remained because of banking weaknesses.

Further quotes went on to say that the financial crisis had greatly affected the banking sector and that it was very important for governments to respect the Euro-zone’s budget deficit rules. Technical analysis points to possible further EURUSD gains today although US major event risk announcements could influence currency movements later this morning.

The US Dollar fell against most of the other major currencies during the night again because of the market’s increased urge for risk appetite. However, the USDYEN has mainly traded sideways and is presently posting 91.75.

There are major event risks today when the S&P/Case-Shiller U.S. home price index will be posted at 9.00am EST and the USD Consumer Confidence (DEC) will be announced at 10.00am EST. The home price index is expected to climb to 147.00 for October indicating that conditions should improve during 2010. In addition, Consumer confidence is anticipated to increase from 49.5 to 53.0 for December suggesting an improved outlook for future growth.