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Optimism for Europe Returns, Greenback Suffers

July 20, 2011 at 19:31 by Vladimir Vyun

US DollarThe US dollar weakened today, falling to the lowest level in almost a week against the euro, as hopes that the European leaders would find a way out of crisis diminished need in safe currencies.

The European politician will meet tomorrow at summit in Brussels. Forex market participants hope that the meeting will result in some cohesive plan to resolve current economic problems of the Eurozone and this optimism made traders prefer riskier assets. The Stoxx Europe 600 Index gained 0.8 percent, while the Standard & Poor’s 500 Index was little changed.

The fundamentals in the US weren’t supportive for the dollar either as today’s report erased optimism for the US housing market, caused by yesterday’s macroeconomic data. Existing home sales unexpectedly dropped from 4.81 million to 4.77 million in June, even though an increase to 4.92 million was predicted by analysts.

EUR/USD climbed from 1.4154 to 1.4226 as of 19:31 GMT today. GBP/USD advanced from 1.6121 to 1.6159 after falling to 1.6067 earlier. USD/JPY dropped from 79.17 to 78.75.

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