The euro (EUR) is experiencing an increase, with recent dips into the low 1.08 zone attracting bargain hunters. Short-term spreads between the Eurozone and the US have narrowed slightly, supporting the currency’s performance.
Recent final CPI data for February indicated that German figures remained unchanged at 0.4% month-on-month and 2.3% year-on-year, with similar unrevised results from France and Spain. The EUR’s rise coincides with an agreement reached by German political parties on Chancellor Merz’s spending package.
Euro Breaks Consolidation
The upward momentum of the EUR suggests a break from recent consolidation, with potential resistance noted at 1.0950/55. A retest of the September highs around 1.12 appears likely given the current market conditions.
The euro’s recent bounce from lower levels aligns with a shift in sentiment, particularly as short-term yield spreads have moved in its favour. The narrowing gap between Eurozone and US rates, while not dramatic, provides enough support to keep the currency from drifting lower.
On the inflation front, February’s final consumer price data out of Germany, France, and Spain reaffirmed previous estimates. Stability in these figures suggests no urgent recalibration from the European Central Bank, which keeps expectations anchored. Meanwhile, the deal struck by lawmakers in Berlin on spending plans removes an element of uncertainty that had weighed on the outlook.
Technical Factors In Focus
Technical factors also warrant attention. The currency now eyes resistance near 1.0950/55, and if momentum persists, those highs last seen in September could come into play. A push past 1.12 would mark a shift in dynamics, potentially inviting repositioning from those who have been sceptical of further gains.
Short-term traders will want to assess upcoming data and central bank guidance closely. Any indications of changing rate expectations—whether in Frankfurt or Washington—could alter the balance. For now, the trend favours the bulls, but upcoming sessions will determine whether the move extends or begins to stall.
