The ECB’s quantitative easing program, which had initially kept the pressure on the Euro, seems to have provided a lift in sentiment among the Eurozone’s business community. That was evidenced by an unexpectedly robust IFO business morale survey from Germany which suggests that, at least within the Eurozone’s economic driver, German businesses and entrepreneurs have a belief that the Eurozone’s economic recovery is finally strengthening. The March IFO for Business Climate and Expectations beat the consensus, with the readings come in at 107.9 and 103.9, respectively. Though analysts say that QE will keep any gains limited, the IFO, coming on the heels of last week’s better than expected ZEW survey from Germany and yesterday’s improvement in German PMI figures, there is a spark of hope for a better economic future.
As reported at 9:26 am (GMT) in London, the EUR/USD was trading 0.3% higher at $1.0955, moving well away from mid-March’s 12-year low when the pair traded at $1.0457. The EUR/JPY was trading at 131.0150 Yen, a gain of 0.27%.
Data to Drive the EUR/USD Pair
Given the Federal Reserve’s more dovish outlook than the one that had been seen only a few weeks ago, the Euro could see additional data-driven bounces; however, says one currency strategist in Germany, those gains are likely not sustainable given that the ECB’s liquidity drive is only in early stages. Still, he points out that given the Fed’s current stance, it is also data which will drive the greenback at least until there is some clarity as regards the timing of the Fed’s next interest rate hike.