With little to bearish economic data on the day, it’s a surprise that the EURUSD is continuing to surge higher on the session – towards an 11-month high. The move is leaving everyone in the market wondering – what’s driving the Euro?

ECB Rate Cuts No Longer An Option

On the heels of last week’s European Central Bank decision to keep rates at the current 0.75%, ECB President Mario Draghi noted that EU economic conditions had improved in recent months as sovereign default insurance and EU bond yields were “significantly lower” due to implemented ECB measures. The policymaker also noted that the region was likely to experience a recovery in the second half of the year, and that “there was no reason to change the medium term outlook for price stability”.

The sentiment was shared by all members on the governing board, with the vote to keep rates stable “unanimous”.

The comments have effectively erased any notion of a rate cut by the ECB, as growth is expected to return along with a stable price environment. Ultimately, the decision bodes well for the currency as it keeps rates higher in Europe, raising demand for the Euro against a lower yielding US dollar.

EURCHF Pullback

With Euro in demand, traders are beginning to unwind previously short EURCHF positions, allowing the cross pair to rocket higher above 1.2250 – the highest in more than a year. With European financial troubles seemingly stabilized, the Swiss franc safe haven trading is losing steam, allowing for additional Euro appreciation. The cross pair flow is supportive of the single currency in the near term, and will likely add to further EUR appreciation on a break of the next viable resistance barrier at 1.2318.

Technical Violation

Technical buying is adding to fundamental drivers on the session, allowing a further extension higher off of the break of the 1.3300 psychological barrier. The round figure remained a key barrier to any further upside in the major pair, previously failing to violate the level back in mid-December.

Now, with pivotal resistance at 1.3300 broken to the upside, the next resistance test for EURUSD will be the 1.3511 50% fib resistance barrier.