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Forex - EUR/USD turns higher in choppy trade, debt woes remain

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Forexpros - The euro turned higher against the U.S. dollar in choppy trade on Thursday, pulling back from a four-day low after a report showing U.S. jobless claims fell to a four-month low boosted sentiment, but gains were limited amid fears the euro zone's debt crisis could spread to the region's banking sector.

EUR/USD pulled back from 1.4102, the lowest since August 5, to hit 1.4233 during U.S. morning trade, gaining 0.38% on the day.

The pair was likely to find support at 1.4054, the low of August 5 and a two-week low and resistance at 1.4425, the high of August 8.

The U.S. Department of Labor said earlier that the number of individuals filing for initial jobless benefits in the week ending August 5 fell by 7,000 to a seasonally adjusted 395,000, outstripping expectations for a decline to 401,000.

It was the lowest level since mid-April, helping to ease concerns over the U.S. economic outlook.

A separate report showed that the U.S. trade deficit widened unexpectedly to USD53.1 billion in June, the largest deficit in almost three years.

U.S. exports in June totaled USD170.8 billion, while U.S. imports totaled USD223.9 billion.

Meanwhile, Bank of France Governor Christian Noyer said earlier that the financial state of French banks is sound, despite rumors that are unfounded.

The recent market turmoil "doesn't affect the financial solidity of French banks and the capacity to resist that they have demonstrated since the start of the crisis," Noyer said.

Concerns over the health of major French lenders, particularly Societe Generale, as well as rumors of an imminent French sovereign debt downgrade rattled investors' confidence on Wednesday, leading to sharp losses in Europe and on Wall Street.

Elsewhere, the euro was also higher against the Swiss franc, with EUR/CHF soaring 5.57% to hit 1.0875, amid speculation the SNB might link the franc to the euro.

Swiss National Bank Vice President Thomas Jordan said earlier that a temporary tie between the Swiss franc and the euro would be legal under the SNB's mandate.

"Any temporary measures to influence the exchange rate are permissible under our mandate as long as these are consistent with long-term price stability," Jordan said.

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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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