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Euro Rallies on ECB Comments

July 25, 2012 at 13:17 by Miranda Marquit

Stack of one-euro coins on a chartEuro is rallying today, heading higher against most major currencies as an official at the European Central Bank expressed the thought that a banking license might be a good idea for the eurozone bailout fund.

Optimism about the euro is returning as Forex traders and investors look for a solution to the eurozone debt crisis. Ewald Nowotny, one of the policymakers at the ECB, said earlier that there were arguments in favor of a banking license for the European Stability Mechanism. The idea is to provide the ESM with a greater ability to participate in the eurozone credit market.

However, there are balancing comments being made by others. First of all, more ECB officials are against the idea of a banking license for the ESM, and there are a number eurozone leaders that are ambivalent about it. On top of that, there are still some very real challenges facing the eurozone, including still-rising Spanish bond yields, as well as a German business climate reading that ended up being a bit disappointing.

At 13:13 GMT EUR/USD is higher, up to 1.2151 from the open at 1.2062. EUR/GBP is up to 0.7849 from the open at 0.7780. EUR/JPY is up to 95.0655 from the open at 91.2960.

If you have any questions, comments or opinions regarding the Euro, feel free to post them using the commentary form below.

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