The euro advanced on Friday as talk that Spain could soon be set to request help saw the currency recover the ground it lost on Thursday.
Further gains could put its four-and-a-half month high of $1.31729 firmly in its sights after having reached that mark earlier in the week. However, traders said they did not expect it to reach this level unless Spain finally opts to request a bailout.
The single currency climbed by 0.5 per cent to a daily high of $1.3048, advancing further after breaking through the stop loss buy orders of $1.30, with investors and traders saying that was due to demand from the Middle East.
There is mounting speculation that Spain is thinking about freezing pensions and raising the retirement age as it tries to meet the international aid packet’s conditions. This led to the euro rebounding strongly from Thursday’s low of $1.2919, when weak business data triggered concerns about the recession worsening.
Meanwhile, the US dollar dropped by 0.4 per cent versus a basket of major currencies, with the dollar index sitting at 79.112, as it closes in on the six-and-a-half month trough of 78.601 which it fell to last week following the US Federal Reserve’s decision to launch aggressive monetary easing.