Euro breaks above 200-DMA on easing debt fears

The euro advanced above its 200-day moving average (DMA) versus the dollar after the currency extended a rebound as traders found solace in Portugal’s ability to sell 10-year bonds at reduced borrowing costs. Portugal issued debt in the first bond sale of the year from a 'peripheral’ eurozone economy, taking some of the pressure off the indebted country, but investors warned bail-out is still likely. The International Monetary Fund said that Europe has yet to allay investor skepticism about the sustainability of the region’s debt. Also, Spain and Italy joined Portugal in completing successful bond auctions, helping ease worries about the fiscal position of the eurozone and prompting benchmark 10-year bond yields to fall across its periphery. The euro rose to a one-month high against the Swiss franc amid speculation that eurozone leaders are preparing robust measures to alleviate the fiscal crisis in the region.



The 17-nation currency touched $1.2867 on Jan. 10, the lowest level since Sept. 14. The euro fell 3.6% last week in its biggest five-day drop since August. The euro has fluctuated near its 200-DMA since Nov. 29, when it fell below that level for the first time in two months. The euro on Thursday touched $1.3383, the highest level since Jan. 4, after ECB President Jean-Claude Trichet said inflation may accelerate. The currency was poised for its biggest weekly gain against the dollar since September after European officials indicated they were ready to expand their efforts to contain the crisis.