By: Hillel Fuld
The EUR experienced a sharp increase as bears were forced to abandon their positions on Tuesday while the USD came under agressive pressure to sell, hitting a three-week low point versus the Japanese currency and a seven-week low against the Australian dollar.
The EUR jumped after stop-loss orders were triggered at key chart points around $1.32. It then increased to $1.3250 EUR=, its highest level in more than a week and extending its recovery from last week's three-week low of $1.3055.
Euro bears had been frustrated by the currency's strong support for more than a week at its 200-day moving average just under $1.31 and were giving up their positions for now.
Many analysts have been betting on continued weakness in the euro due to persistent concerns that some euro zone countries such as Spain and Portugal may need rescue programs to finance debt, tracking a path trodden by Greece and Ireland.
"It's a flow-driven market so it's hard to tell how long this rise in the euro will continue," said a trader at a European bank, noting that a speculative player appears to have tried to take advantage of thin trade to push up the euro.