The Euro gains as European banks announce better than expected results

The euro rose against the dollar after European banks reported fourth-quarter results that beat some analysts’ forecasts, easing concern the region’s financial crisis will worsen. The European currency snapped two days of losses versus the greenback and the yen after Commerzbank AG, Germany’s second- largest bank, posted a net loss of 809 million euros ($1.02 billion), compared with analysts’ median estimate for a loss of 851 million euros. ING Groep NV, the biggest Dutch financial company, had a loss of 3.71 billion euros, versus the 3.9 billion-euro loss it forecast last month. “Worries are mounting over the financial situation in central and eastern Europe, especially about countries that have large exposure to those regions,” said Akifumi Uchida, deputy general manager of the marketing unit in Tokyo at Sumitomo Trust & Banking Co. “The euro is likely to depreciate” to $1.25 and 115.50 yen today, he said. The EUR/USD is currently trading at $1.2620 as of 8:30am, GMT.

The dollar may gain against the yen in the next three months should it rise above so-called resistance at 94.63 yen, based on trading patterns, Standard Chartered Plc said. in Singapore. The 94.63 yen level would match the greenback’s highest this year, reached Jan. 6, as well as creating potential for a so-called double bottom on a daily chart using 13-week moving averages, Callum Henderson, head of global currency strategy at Standard Chartered in Singapore, wrote in a note to clients. A double bottom forms when a currency makes two successive troughs of similar depth, indicating potential for it to rebound. The USD/JPY is currently trading at 92.40 as of 8:45am, GMT.

Sterling bounced off two-week lows against the dollar on Tuesday after consumer price inflation fell less than expected in January, but gains were capped by investor risk aversion that gave a broad boost to the dollar. The pound strengthened against the euro after Moody's ratings agency said recession in eastern Europe would affect Austrian, Italian, French, German, Belgian and Swedish banks due to their exposure to the region. "The BoE remains very focused on the underlying economic situation. We are moving towards the next stage of the cycle, quantitative easing, and it seems very unlikely that the (CPI) report will do anything to blunt that course of action," said Simon Derrick, head of currency research at Bank of NY Mellon. The GBP/USD is currently trading at $1.4170 as of 9:15am, GMT.

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