The euro gained ground against major currencies during Monday’s European session, buoyed by higher trading in European stock markets. Key sectors such as mining and retail contributed to market optimism, although broader caution prevailed as investors awaited U.S.
President Donald Trump’s inauguration speech. The anticipated address is expected to shed light on prospective tax reforms and tariff policies.
Market Conditions and Central Bank Speculations
Trading activity remained subdued due to the Martin Luther King Jr. Day holiday in the U.S., limiting market movements. Meanwhile, speculation about potential European Central Bank (ECB) interest rate cuts in upcoming policy meetings added to market anticipation, influencing the euro’s performance.
Positive data from Eurostat offered further support for the euro. Eurozone construction output grew by 1.2% in November, marking the fastest monthly expansion in nearly two years. This follows a 0.8% rise in October. Annually, industrial production increased by 1.4% in November, reversing a flat performance in October and breaking a ten-month stagnation streak.
Euro’s Performance Against Major Currencies
- Against the Pound and Yen: The euro reached a near five-month high of 0.8474 against the pound and a five-day high of 161.29 against the yen, rebounding from early session lows. Resistance levels are projected at 0.85 against the pound and 166.00 against the yen.
- Against the Swiss Franc and Canadian Dollar: The euro climbed to two-week highs of 0.9423 and 1.4930, respectively, with potential resistance levels at 0.95 against the franc and 1.51 against the loonie.
- Against the U.S. Dollar: The euro edged up to 1.0319, with the next possible target being the 1.04 region.
Upcoming Events
Traders will closely watch the Bank of Canada’s Business Outlook Survey results, set to release during the New York session, for additional insights into global market trends.
Conclusion
The euro’s strength reflects a mix of positive economic data and cautious optimism in European markets. However, its trajectory remains sensitive to global economic shifts, particularly developments surrounding the new U.S. administration’s policies and ECB decisions. With key resistance levels in sight, the euro’s movement will be closely monitored in the coming sessions.