Each Central bank has its own weighting of reserve assets. Most hold some combination USD and Euros with some holding a more diverse basket with additional weightings in GBP, CAD, AUD…
During the depths of the European sovereign debt crisis, central banks around the globe shied away from adding to euro reserves. Since Europe has addressed some of the debt concerns with austerity packages and a backstop that will go into business shortly, the ESFS.
Central banks have taken comfort in these moves and have begun to rebuild their EUR holdings, helping underpin the recent rebound. We are seeing more of those purchases on dips today, with Middle Eastern and Asian central banks especially active, traders say.
Bids are seen in the 1.2940/50 area on dips near-term with more toward 1.2920. 1.2990 is first resistance followed by 1.3010/20.
