The euro spiked higher against its most major counterparts in Asian trading on Friday after European Union President Herman Van Rompuy said that the leaders have agreed to use the continent's permanent bailout fund to recapitalize struggling banks and agreed to the idea of a tighter union in the long term.
EU President said that banks can be recapped directly with aid funds, calling it a "breakthrough". He also noted that the leaders agreed to a joint banking supervisory body.
EU leaders also welcomed the European Central Bank's decision to serve as an agent to the European Financial Stability Facility and later to the European Stability Mechanism, when it comes into force, in conducting market operations.
The finance chiefs said they intend to task Eurogroup to implement these decisions by July 9, 2012.
The European Union leaders, who began their 2-day summit in Brussels on Thursday pledged to inject 120 billion-euro, or $149 billion, package to promote growth in the debt-stricken eurozone as well as across the broader 27-nation European Union.
The growth package includes a 10 billion euro capital boost for the European Investment Bank. It also redirects 60 billion euros of unused structural funds to help small enterprises and create youth employment in most needy countries.
The euro that ended Thursday's trading at 1.2444 against the US dollar gained 1.5 percent and hit an 8-day high of 1.2629 in Asian deals. On the upside, 1.275 is seen as the next target level for the euro-dollar pair.
The euro was under pressure yesterday, hitting a fresh 3-week low of 1.2409 against the dollar in European deals as German employment data disappointed investors. But the euro-dollar pair mostly moved sideways in the New York as caution ahead of the outcome of the first day of European Union summit in Brussels refrained investors from taking bets.
The euro's rise against the yen in Asian deals helped it recover from yesterday's fresh 3-week low of 98.35. The euro-yen pair reached a 4-day high of 100.25 and the next upside target level for the euro is seen at 101.0. The pair closed Thursday's New York session at 98.90.
The euro also strengthened sharply against the pound, hitting an 8-day high of 0.8091. This was up 0.9 percent from yesterday's close of 0.8021. If the euro-pound pair advances further, it will target the 0.815 level.
Against the Canadian dollar, the euro jumped to an 11-day high of 1.2981 from yesterday's closing value of 1.2863. On the upside, 1.30 is seen as the next target level for the European currency.
The euro also climbed to a 3-day high of 1.2445 against the Australian dollar and if the euro gains further, it will target the 1.250 level. The euro-aussie pair ended yesterday's trading at 1.2393.
But the euro held in a tight range against the Swiss franc, with the pair currently trading at 1.2014.
Looking ahead, Japan's housing starts data for May is due at 1 am ET.
In the European session, French GDP for the first quarter, Swiss KOF leading indicator for June, Eurozone M3 money supply for May and the inflation estimate for June, U.K. services index for April are slated for release.
The U.S. and Canadian GDP data, Canada's industrial product prices and raw materials price indexes -all for May, the Chicago PMI and the University of Michigan's final consumer confidence report-both for June are expected in the New York session.
