Euro Recovers amid Increase in Risk Taking

After tumbling against the British pound and US dollar in morning trading yesterday, the euro was able to stage a recovery later in the day after positive US news led to risk taking among investors. The EUR/GBP fell more than 30 pips following a better than expected UK retail sales report. After trading as low as 0.7811, the common currency was able to bounce back, eventually reaching as high as 0.7842 during the afternoon session. Against the greenback, the euro was able to advance more than 75 pips over the course of the European session to reach as high as 1.2339. Today, in addition to US consumer sentiment data which could have a significant impact on risk appetite, euro traders will also want to pay attention to any announcements from euro-zone officials regarding the region's debt crisis and any plans to lower borrowing costs in Spain and Italy. Positive developments with plans to revive the euro-zone economic recovery could lead to broad gains for riskier currencies, including the euro, before markets close for the weekend.

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