The European Single Currency, euro, on Wednesday,October 11, held near a 12-day high as political tensions over Catalonia receded slightly.
The euro was flat at $1.1808 after touching $1.1828, its highest since Sept. 29, thanks partly to upbeat euro zone economic indicators that have helped it rally from a seven-week low of $1.1669 on Friday.
The euro’s rally strengthened after Catalan leader Carles Puigdemont on Tuesday proclaimed the region’s independence from Spain but said the effects would be postponed to allow for talks, averting an immediate crisis.
“That Puidgemont has suggested making time for talks is supporting the euro. The main scenario is likely to involve the Spanish central government award some concessions to Catalonia to defuse the situation,” said Daisuke Karakama, chief market economist at Mizuho Bank.
Strong economic data out of Germany boosted confidence in the euro, as robust industrial output numbers posted on Monday were followed by figures on Tuesday showing exports surged in August.
“The Catalonia issue is likely to fade away as a market theme and speculators will find it harder to sell the euro in turn,” said Yukio Izhizuki, senior currency strategist at Daiwa Securities.
“The dollar is also looking heavy against the euro due to uncertainty over U.S. tax issues. Squabbles surrounding Trump’s efforts come as no surprise, but it is still not helping the dollar.”