Forex snapshot

The euro has been given a much needed shot in the arm after strong investor confidence figures from the eurozone, while sterling is extending its losses after hitting new multi-year highs last week.

Euro notes
Source: Bloomberg

Euro boosted by sentix report

The euro is trading at $1.3598; the currency had drifted lower in early morning trading, but the surprisingly good investor confidence number from the eurozone triggered short covering.

It is encouraging to see investor confidence is picking up in the eurozone, less than two months after the European Central Bank cut interest rates to yet another record low.

There are no other major economic announcements expected from the eurozone or the US, and I expect EUR/USD will remain below the $1.36 handle for the remainder of the session.

Tomorrow, Germany and France will release the latest trade figures. As I previously stated, I predict the economic indicators from the eurozone will continue to paint a picture that the region is in decline, which will weigh on the currency. The short-term target for the euro is $1.3560 and then $1.3520.

Pound continues to tumble

GBP/USD is trading at $1.7122, down 0.2% on the day. The currency pair has remained within the range of $1.7160-$1.7100 for the past few trading sessions, and today it is at the lower end of this range. If it can hold on to the $1.71 mark, that would leave it in a good position ahead of the UK industrial production and manufacturing figures tomorrow.

The Federal Reserve minutes on Wednesday and the Bank of England meeting on Thursday will inject volatility into the forex market, and I expect the BoE to be the more hawkish of the two.

The pound is receiving support at $1.7090, and cautious commentary from Mark Carney could push it to $1.7175.

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