Wednesday saw the common currency of the European Union continue its rally against the U.S. dollar, which now has notched four consecutive days, Reuters according to
the European Commission announced inspectors from the European Central Bank, the International Monetary Fund and the European Union are set to visit Greece on Thursday, when a decision might occur as to if the Aegean nation will receive a second round of international bailout aid.
Funding from that second round of aid is scheduled to be used to effect repayments on the first round, which was disbursed in June 2010, but Greece has run into trouble paying it back. Greece is one of the core nations suffering the consequences of the sovereign debt crisis, which has weighed heavily on the euro while also inflicting damage on Italy, Ireland, Portugal and Spain.
During the past several days, the markets have enjoyed measures of confidence over speculation about euro zone officials' devotion to handling the crisis that has victimized regional banks and public finance systems. Many leaders had criticized officials in the euro zone for their failure to contain the scourge or prevent its spreading to other nations as Greece struggles to prevent a default, which would prove to be harmful for markets, currencies and additional regions germane to finance.
Thursday saw Finland elect to approve increased powers to the euro zone bailout fund, which bolstered the strength of the euro. The proposal that Finland supported was first agreed to by leaders in the euro zone in July, but it requires approval by all nations' parliaments in order to be passed.
"With 10 of the 17 member eurogroup having ratified a bailout fund, there is no question that Europe is clearing each hurdle slowly and inching closer to a broader and more ambitious plan to expand their resources and prevent contagion," currency research director Kathy Lien with GFT Forex told Reuters.
The euro's strength also benefited from inflation rising in Germany, and a byproduct of that metric is likely to be relaxed pressure on the European Central Bank to decrease interest rates.
Finance ministers from the euro zone are likely to conduct additional meetings next month to conduct discussions about the sovereign debt crisis in Greece and how funding from the emergency bailout trance will be disbursed should inspectors and officials from the International Monetary Fund, the European Union and the European Central Bank deliver a positive assessment of Greece's adherence to conditions and terms of the bailout.
Lien underscored the importance of euro zone officials publicly acknowledging progress with the deal for Greece to receive the bailout aid and avoid a default. The optimism might fall short, which would impact the rally that the euro has enjoyed.
"Although currencies and equities have held on to their gains, the price action in the market suggests that the patience of investors is wearing thin," Lien told Reuters.
Concerns about the potential default and how it will damage the banking and finance system in Europe have been a driver of the more than 5 percent drop that the common currency of the European Union has endured thus far this month.
The euro's retreat might prompt assets considered risky to find support from demand by money managers who have manipulated their portfolios as a strategy to compensate for some assets' loss in value.
The dollar index, a metric that monitors the strength of the U.S. dollar when compared to six counterpart currencies, indicated the greenback fell in value Wednesday as compared to its value late Tuesday.