Euro heads for first weekly rise in four against greenback

The euro headed for its first weekly rise in four weeks against the US dollar yesterday, but further gains looked limited as investors believed Greece's debt crisis was far from over despite easing fears of an immediate default. The European single currency earlier climbed to a three-week peak above $1.45 (Dh5.32), helped by an increase in risk appetite. It then retreated as traders squared positions ahead of the long holiday weekend in the United States. Stave off bankruptcy The Greek parliament passed two crucial austerity bills last week, opening the way for international lenders to release a €12 billion (Dh63.88 billion) loan instalment that Athens urgently needs to stave off bankruptcy. Article continues below Uncertainty about the longer-term solution remained, and Eurozone finance ministers are scheduled to hold preliminary talks this weekend on the second financing package for Greece for 2011-2014, which could total up to €120 billion. "We've gone from basically $1.41 to $1.45. I think that's a good level as far as the rebound is concerned," said Ronald Simpson, director of currency research at Action Economics in Tampa, Florida. "I've heard talk yesterday and today of investment fund flows out of the euro over $1.45. I think the smart money is looking at levels to sell here now rather than buy." In early trading, the euro slipped 0.3 per cent to $1.4460. It had earlier risen as high as $1.4553 on trading platform EBS in a move that pushed through a big options barrier around $1.4550. It was up about 2 per cent last week. The euro hit a three-week high of 1.2301 Swiss francs as investors cut back long positions in the safe-haven Swiss currency. It was last up 0.5 per cent at 1.2246. Corporate demand The dollar climbed 0.9 per cent to 0.8477 franc, moving further away from a lifetime low of 0.8276 set on EBS earlier in the week. Traders cited corporate-related demand from Swiss banks as driving the dollar higher. Some analysts said the market may start to rebuild long euro positions ahead of an expected interest-rate hike by the European Central Bank next Thursday, which would further move interest-rate differential in favour of the euro. Euro resistance seen at $1.4570 On the upside, euro resistance is seen at around $1.4570 (Dh5.35), the 61.8 per cent retracement of the euro's fall from its high on May 4 to its low on May 23. Support is seen around $1.4460, traders said, which was followed by levels around $1.4405, where its 55- and 21-day moving averages were located.