The euro surged to a three-week peak against the dollar on Thursday, swept higher by a wave of stop-loss buying and extending a rally after Greece moved a step closer to securing international aid. Dollar-selling by macro hedge funds, a flurry of short-covering in the euro, and traders establishing long euro positions all helped lift the single currency, which extended its gains further after taking out an option barrier at $1.45.
The rise came after Greek lawmakers voted by a clear margin for a five-year austerity plan. The solid margin suggested the government should be able to push through a second package of laws on Thursday, implementing specific budget measures and asset sales. The euro climbed 0.5 percent to $1.4498. At one point, it rose as far as $1.45195 on trading platform EBS, its highest level in about three weeks. Traders cited talk of stop-loss euro bids at levels around $1.4510 to $1.4550.
Ahead of the euro's early June peak right near $1.47, one possible upside target sits at about $1.4550, roughly a 76.4 percent retracement of the euro's drop from the high near $1.47 down to its mid-June trough around $1.4070. The euro also faces resistance near $1.4540, trendline resistance drawn off peaks hit in early May and early June. Top of the shopping list for them were commodity currencies, which rallied across the board. The Australian dollar rose 0.6 percent to $1.0737.
The Aussie added to gains made on Wednesday, when it climbed above resistance at its 55-day average near $1.0660 and the top of the daily Ichimoku cloud near $1.0650, possibly setting itself up for a further rise. The New Zealand dollar hit a 26-year high of $0.8320, and was last up 0.5 percent at $0.8292. Not surprisingly, the US dollar was among the main casualties.
The dollar index, which tracks its performance against a basket of major currencies, touched its lowest in more than two weeks at one point, and last stood at 74.342. The dollar fell 0.5 percent to 80.41 yen, with traders citing active dollar-selling by Japanese exporters. The dollar slipped 0.4 percent versus the Swiss franc to 0.8313, nearing a record low of 0.8276 hit on EBS this week.