- Duncan de Vries, economist at Nibc Bank NV
The single currency soared to its highest level in three weeks against the U.S. Dollar ahead of the Eurogroup meeting, while the fact the U.S. markets will remain closed on Monday means that the most traded currency pair will be driven by fundamental news from Europe. The EUR/USD currency pair was able to reach 1.3724 on Monday– the highest since January 24. The next key resistance is located around 1.3739.
Earlier this year the European Central Bank signalled they are ready to act in order to counter weak inflationary pressure in the 18-nation bloc; however, last' weeks GDP report may ease some of the pressure, as growth came above analysts' forecasts. The latest poll conducted by Bloomberg shows that nineteen out of 38 economists still expect European policymakers to pull the trigger during its meeting in March. At the same time, the same number forecast the ECB to stay pat. It seems that experts are divided on their assessments of the economy as inflation stood at a four-year low in January, while growth accelerated further. While Europe's largest economies were still fuelling the overall expansion in the final quarter, another important aspect is the improvement in periphery countries. Among the specialists, who predicted an action from the ECB, the most probable decision were seen as another rate cut and the end to the sterilization of crisis– period of bond purchases.
© Dukascopy Bank SA