The Euro rose up higher than the Dollar on Monday but wasn’t as much as expected after many traders decided that the stress tests conducted on the European banks weren’t good enough to help sustain a high flying European currency.

More people started trading in the yen after its perceived risk got eroded as a result of European shares going down and stocks on the US market expected to be lower for sometime.

Boris Schlossberg, a director for currency research at GFT in New York said the stress tests didn’t influence the market as expected and instead encouraging information about the European market was more influential.

The euro was trading at $1.19 last month; the lowest since 2006 as a result of concerns over the debt levels of the euro zone countries and how they will affect the banks in Europe but it started increasing consistently in July and reached over $1.30 last week, which was the highest for 10 weeks.

The good news seems to be as a result of reports which showed European nations were doing better than expected even though many countries are cutting down on cost to help pay for the high budget deficits.

Just seven of the 91 banks didn’t pass the test and this help increase the euro over 0.2 percent higher than the dollar at $1.2923 EUR. The euro however fell from as much as $1.2958 which was the previous price.

Currency experts expect the Euro to increase towards $1.3125, a reversal of 38.2 percent from December to June. It will however need to have a consistent price of more than $1.30, which has not been achieved since early last week when it was trading at $1.3028.

The euro’s decrease didn’t seem to be much as it sold for around $1.2870, which has been the average price for the past 100 days. It sold for a low of $1.2730which leaves it off target at the moment.

Mature euro zone bonds and coupon payments were redeemed this week worth over 45 billion Euros and this is expected to restrict the euro’s price increments.

The Commodity Futures Trading Commission released information this week which indicated showed currency experts released earlier their euro positions. Last week there were 27,050 but were reduced to 24,251 contracts in the week leading to July 20.

Roberto Mialich, currency strategist at Unicredit in Milan. Said the stress tests did not have a major effect on the euro/dollar relationship but there are no reasons to indicate that traders should sell their euro swiftly.

YEN GAINS:
Many invested were not concerned about risked involved with the yen and helped push up the currency’s price. The euro raised to the highest in 7 weeks at 113.49 yen EUR/JPY as many traders sold their long term yen currencies and after heard about offers for 113.30/50 yen from Japanese exporters.

It reduced to 112.64 yen, a 0.2 percent which also lowered the dollar down 0.4 percent to 87.10 yen JPY.
Poor US manufacturing and housing data is expected to weaken the dollar. Experts anticipate Friday’s U.S. second quarter gross domestic product numbers to be lower.

The Australian dollar sold at $0.8990 AUD, the highest for 10 weeks after differences in interest rates with the US.