Euro Gains -- In Spite of Irish Downgrade

Many forex traders got a bit of a surprise today when the euro moved higher in forex trading against the U.S. dollar. This is because many expected the euro to weaken on the currency market, due to some continuing issues in Europe.

First of all, Hungary failed to come to a funding agreement with the IMF. Then Moody's downgraded Ireland's sovereign debt rating. All of this seemed to indicate that the euro would head lower in forex trading.

However, this wasn't the case. Instead, the euro has taken off in forex trading, once again looking to breach the 1.30 level against the U.S. dollar. There is an explanation for this seemingly odd behavior, though. GFT's Boris Schlossberg looks at the issues helping the euro in forex trading:

For now  the euro is gaining ground due to its old familiar role as the anti-dollar bet, as investors become increasingly worried about US economic  growth going forward.  However, as we’ve seen today, the sovereign debt problems  that have dogged  the unit since the start of the year, have not  been resolved and could revive once again if the results of the banking  system stress tests due this Friday prove disappointing.