The euro rose for the first time in seven weeks versus the yen on speculation Spain may receive aid to ensure access to capital markets and amid indications the shared currency’s decline was too rapid.
The euro rallied against the dollar as European Central Bank (ECB) President Mario Draghi said policymakers were “ready to act” after leaving their benchmark rate at a record low. The greenback declined after China cut its key interest rates for the first time since 2008, damping appetite for refuge assets.
“The euro can’t fall forever,” said Blake Jespersen, director of foreign exchange in Toronto at Bank of Montreal. “There was bound to be some profit-taking at some point, or some hope that Europe would finally embrace the euro bond, or more importantly, the bank recapitalization from Spain.”
The euro rose 2.5 percent to ￥99.47, its first weekly increase since April 20. The shared currency gained 0.7 percent to US$1.2517 for its first rise against the greenback in six weeks. The yen lost 1.9 percent to ￥79.49 per US dollar.
The US dollar pared losses on Thursday as US Federal Reserve Chairman Ben Bernanke refrained from signaling additional steps the central bank might take to spur growth, during congressional testimony.
“The situation in Europe poses significant risks to the US financial system and economy and must be monitored closely,” Bernanke said in testimony to the US Congress Joint Economic Committee in Washington. “As always, the Federal Reserve remains prepared to take action as needed to protect the US financial system and economy in the event that financial stresses escalate.”
The Dollar Index, which IntercontinentalExchange Inc uses to track the greenback against the currencies of six major US trading partners, fell 0.5 percent to 82.439. It touched 81.911 on June 7, the lowest level since May 28.
The shared currency touched to a two-week high versus the US dollar on Thursday as German Chancellor Angela Merkel said the nation is ready to back eurozone financial instruments. Merkel did not specify which financial instruments she was discussing.