ForexNewsNow – The euro fell against the dollar on Wednesday morning before gaining even more ground during an impressive rise in value. Foreign exchange markets at first reflected new concerns among investors following the rejection by Slovakia to strengthen the Euro zone rescue fund (EFSF), which may aggravate the debt crisis in the monetary union, but once this disappointment subsided, the euro began an impressive climb vis-a-vis the dollar.
The euro was increasing in value against the US dollar today, trading at 1.3764 as of around 13:30 P.M. GMT.
The EUR/USD pair is up 0.916% on the day and has reached a session high of 1.3816 with a low of 1.3583.
Slovak MPs rejected the strengthening of the European Emergency Fund (EFSF) on Tuesday, but a possible second vote might take place in the coming days.
“The rejection was expected and the consensus is that the plan will be adopted during the second vote,” said Sumino Kamei, chief analyst at Bank of Tokyo-Mitsubishi UFJ.
The announcement had, however, a serious impact on market sentiments driving down stock markets in Asia and reminding traders that economic problems will persist in Europe despite new measures announced over the weekend by France and Germany.
“The issues have now deeply rooted origins and it is unlikely that the euro will move upward in the near future,” said Kamei.
The market is waiting for the meeting on Friday and Saturday in Paris of finance ministers from the G20.
“Problems cannot be fully resolved at this meeting. Even if the participants reach an agreement and issue a statement, it will take several years to fully implement it,” said Mr Kamei.
The agreement of the “troika” – which brings together European Commission, European Central Bank and International Monetary Fund – on a new tranche of financial assistance to Athens, forecasts however, that “additional measures,” will be needed in 2013 and 2014 to allow the country to fulfill its objectives of deficit reduction.