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Forex - EUR/USD jumps to 3-week high, trades above 1.4450

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Forexpros - The euro extended gains against the U.S. dollar on Monday, climbing to a three-week high after the European Central Bank said it bought EUR22 billion in Italian and Spanish debt last week, boosting optimism that European officials will do everything in their power to resolve the region's debt crisis.

EUR/USD hit 1.4476 during U.S. morning trade, the highest since July 27; the pair subsequently consolidated at 1.4469, jumping 1.55%.

The pair was likely to find support at 1.4149, last Friday's low and resistance at 1.4535, the high of July 27.

The European Central Bank said earlier that it purchased EUR22 billion worth of Italian and Spanish government debt last week in an effort to prevent the euro zone's debt crisis from spreading to the region's third and fourth largest economies.

The amount exceeded purchases made by the ECB in May, 2010 when it first launched emergency purchases of Greek bonds. Then, it bought EUR16.5 billion.

Markets had expected ECB bond purchases to total EUR15 billion last week.

Meanwhile, markets were awaiting Tuesday's meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris, to further asses the region's debt crisis and how officials plan to handle escalating contagion threats.

German government spokesman Steffen Seibert said earlier that the German government would not consider the introduction of euro bonds as a viable option to solve the region's ongoing debt crisis.

"The German government has said on numerous occasions that it does not believe Eurobonds make sense and that's why they will not play any role at tomorrow's meeting," Seibert said.

Over the weekend, Italian Finance Minister Giulio Tremonti called for the creation of such bonds, saying, "We wouldn't be where we are now if we had had euro bonds."

Elsewhere, the euro was also up against the pound, with EUR/GBP adding 0.73% to hit 0.8818.

Earlier Monday, official data showed that an index of manufacturing conditions in New York State fell by 3.9 points to minus 7.7 in August from minus 3.8 in July.

Analysts had expected the index to improve to minus 0.4 in August.

A separate report showed that net foreign purchases of long-term U.S. securities totaled USD3.7 billion in June, significantly below expectations of USD30.1 billion.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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