"Thanksgiving week" Irish debt resolved
FOREX-Euro rises on Ireland hopes, resistance to cap gain
Fri Nov 19, 2010 10:06am EST
Euro up on hopes for Irish aid package support
* China tightens by raising bank reserve requirements
* Bernanke defends QE, dismisses charges of debasing dollar (Adds quote, updates prices, changes byline, changes dateline, previous LONDON)
By Wanfeng Zhou
NEW YORK, Nov 19 (Reuters) - The euro edged higher on Friday on growing confidence that Ireland's banking and debt crisis will be resolved, but key resistance should cap gains in the near term.
Hopes that Ireland was near a deal to get tens of billions of euros from its European partners and the IMF helped push the euro above $1.37 overnight, but momentum stalled ahead of resistance around $1.3750. Traders said this level is likely to hold until markets get more details on the Irish rescue plan.
A financial aid deal to help Ireland cope with its battered banks will be unveiled next week, EU sources said on Friday. Ireland's government would publish the details of a four-year fiscal plan to save 15 billion euros at roughly the same time. See [ID:nLDE6AI0QG]
"Even if the way to stability is not exactly clear, the market seems to be getting more comfortable with the idea that ultimately the situation will be stabilized one way or the other," said Daniel Katzive, currency strategist at Credit Suisse in New York. "The tail risks for the euro are not as severe as they were in April or May."
The euro EUR= was last up 0.2 percent at $1.3674, after having risen as high as $1.3733 on trading platform EBS. It has recovered from a slide to a seven-week low of $1.3446 earlier in the week and is poised to end the week slightly lower against the dollar.
The single currency remained resilient after news that China tightened monetary policy by raising banks' reserve requirements, which dented some risk appetite. [ID:nL3E6MJ0N8]
Support come in at the 55-day moving average at $1.3607. Traders said the euro still needs to get above resistance at $1.3750 to put an end to the downward correction of the last couple of weeks.
"That's the level from which the euro broke earlier to run to the $1.42 level. Now we're having a hard time clearing it," said Boris Schlossberg, director of currency research at GFT in New York.
Take a Look on Ireland crisis: [ID:nLDE68T0MG]
Graphic on euro zone's struggle with debt: