EUR/USD consolidates weekly gains, heads to highest close since Dec 2014

  • Euro among top performers on ECB and German politics. 
  • US Dollar consolidates weekly losses, remains under pressure. 

The EUR/USD pair was steady, above 1.2120, consolidating import daily and weekly gains. 

On Thursday, the minutes from the latest meeting of the European Central Bank and on Friday, developments in German politics boosted the euro across the board. EUR/USD also received an impulse from a weak US dollar. Rising US yields were offset by the move in European bonds, so the greenback was unable to benefit from the bond market. 

“While the release of the ECB minutes were a crucial contributing factor behind the latest surge in EUR/USD, the move also took encouragement from yet another release of benign US inflation data”, said analysts from Rabobank. 

EUR/USD peaked during the American session at 1.2155, the highest level in three years. Afterward pulled back finding support above 1.2110. As of writing it was trading at 1.2135, up a hundred pips on Friday. 

More gains ahead?

The pair is about to close above 2017 highs, on what could signal more gains over the medium term from a technical perspective. On the fundamental side, the ECB mentioned that it could consider changes in its guidance from early 2018 that points toward some kind of normalization. The move shows confidence in the Eurozone economy and it has already boosted the euro. Monetary policy expectations from the Fed and the ECB are finally converging? 

“Our relatively cautious view on US inflation and Fed policy combined with the market’s enthusiasm for pricing in an end of the ECB’s QE policy supports our view that EUR/USD has further upside potential this year. We see a move towards the 1.24 region by year-end”, explained analyst at Rabobank. 

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