Euro edges higher due to short covering

The euro is now up 0.2% against the US dollar, after losing ground last week.

EUR/USD is trading at $1.3397, as traders who shorted the currency last week are closing out their positions today to secure profits. On Thursday, the decision by the European Central Bank (ECB) to lower interest rates weighed on the currency, and the much-better-than-expected non-farm payrolls figure on Friday pushed the euro even lower. The jobs report from the US initially mislead some traders: even though the headline figure was strong, the unemployment rate actually ticked up to 7.3%. This put tapering fears at ease.

The Greek prime minister, Antonis Samaras, survived a vote of no confidence, which means the Greek government can continue with its austerity programme. However, the fact that a no-confidence vote had to be held in the first place highlights how divided the Greek parliament is.

Jens Weidmann of the German central bank is due to make an announcement at 5pm (London time), and as Stan Shamu explained, traders will be interested in what he has to say given the ECB interest rate cut and French downgrade by Standard and Poor’s last week.

Spot FX EUR/USD chart

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