The US dollar fell on Tuesday against the euro as the investors were optimistic about the euro zone debt solution ahead of the European Leaders summit by the end of this week. Leaders from 27 European Union member countries will meet in Brussels on Friday to discuss the different fiscal rules which could be helpful in European financial stability.
Research director, Kathleen Brooks from forex.com commented, “Markets may be reacting mildly to the risk of downgrades because so many of the major economies are under the same threat, and the safest ones may still benefit from any flight to safety,” she further added, “Although markets reacted to the S&P news by selling risk, on second thoughts the markets may have decided that AA-plus is the new AAA.”
The single currency remained under pressure in earlier trading session due to warning of reduced credit rating by Standard & Poor’s rating agency.
The euro gained to 1.3416 against the US dollar on Tuesday as compared to 1.3386 on Monday’s late trading hours.
The dollar index DXY which tracks the greenback’s movement against its six major counterparts fell to 78.498 on Tuesday as compared to 78.654 on Monday’s North American trading session.
The US dollar also fell to 77.75 against the Japanese yen on Tuesday as compared to 77.80 on late Monday. However, the Pound Sterling declined versus the greenback to 1.5609 on Tuesday as compared to 1.5637 on Monday’s late trading hours despite the news of Bank of England extending its lending facility for tackle the liquidity crunch.
