Euro bounces on Inflation forcast

The Euro made on strong rebound yesterday against the US dollar after the European central bank revised its inflation level upwards which gives hope to a rise in interest rates in the Eurozone as the year unfolds. Interest rates in Europe have at or below 0 for sometime in Europe which has weighed on the Euro as investors look for somewhere else to park their money for some type of return.

The inflation forecast by ECB President Christine Lagarde is a welcoming relief and she noted at a press conference on Thursday that the figure could temporarily rise above 2%.

“We know that 2% is not going to be constantly on target, there might be some moderate, temporary deviation in either direction of that 2% and that is okay. What we are very concerned about is any sustainable, durable, significant deviation from the target and that will require forceful action.” She said.

Mrs Lagarde is also due to give a speech later today on monetary policy on behalf of the European Central Bank which may give the Euro a further boost if she is upbeat.

The strength in the Euro has carried on from yesterday’s trading session and with no major economic news out today, the focus will be on the ECB speech and their outlook.

In yesterday’s trading session the currency reached the major resistance level of $1.1858 before finishing the day slightly lower. In today’s session we may see another attempt to break this level and if this happens, it should leave the Euro in a strong position to kick off next week.