Several factors boosted the Euro during local trading.
While the common currency rallied after a measure of economic sentiment in Germany produced its highest reading since 2009, the Euro was able to consolidate and extend gains as the Organisation for Economic Cooperation and Development (OECD) positively revised its forecast for the Eurozone.
Earlier this year the OECD forecast that the economy of the 17-nation currency bloc would contract by 0.6 per cent in 2013. The institution now foresees contraction of just 0.4 per cent. Growth of 1.0 per cent is expected for the following year.
However, as the OECD also lowered the global economic forecast the appeal of higher-risk assets was slightly dented and the Euro’s advance was restrained.
The Euro is currently trading against the US Dollar in the region of 1.3540
But before the European session closed the Euro was given an additional boost in the form of comments issued by a European Central Bank official.
Since the ECB delivered a surprise rate cut at its last policy meeting the Euro has been feeling the pressure, and the prospect of the central bank instating negative rates in order to combat inflation concerns has seen the European asset tumble against several of its peers.
So hearing an ECB Board Member stress the importance of approaching this measure with caution lent the Euro support.
Board Member Joerg Asmussen asserted that policy makers still had other tools at their disposal and must attempt to counter low inflation in other ways before adopting negative interest rates.
According to senior currency strategist Geoffrey Yu; ‘There was suspicion the ECB might be on the verge of doing something aggressive, like QE and negative rates, but the commentaries from ECB we’ve had since than have been scaling back from it. Maybe there’s some correction to that.’
The Euro approached a two-week high against the US Dollar as Chicago Federal Reserve President Charles Evans reiterated the stance adopted by other Fed officials and stated that substantial improvements in the domestic labour market must be achieved before bond buying can be trimmed.
The Euro also hit a four-year high against the Japanese Yen overnight.
Further EUR/USD movement could be inspired by today’s German producer price data. US advance retail sales will also be of considerable interest.
If the retail sales report shows the improvement expected the US Dollar could recover losses during North American trading.
Euro (EUR) Exchange Rates
As of 07:05 am GMT
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3540 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8408 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4428 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6197 <
The Euro/ Canadian Dollar Exchange Rate is currently in the region of: 1.4175 <