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Forex pairs in this Article » EUR/USD
FXStreet (Guatemala) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ said that the euro is continuing to derive support from building evidence that the German economy appears to be expanding strongly.

Key Quotes:

"The release yesterday of the German IFO survey for February was consistent with the PMI surveys in signalling that economic growth momentum is strengthening further in Q1."

"Current conditions increased by 2.0 points to 114.4 in February reaching the highest level since April 2012. The release of the breakdown of the German GDP report for Q4 revealed that the main driver of growth was net trade which added 1.1 percentage points to real GDP growth of 0.4%."

"Fixed capital investment also added 0.2 percentage points while the main drag on growth was from inventories which subtracted -0.8 percentage points".

"We expect that economic growth will accelerate further in Q1 lifting real GDP growth towards 2.0% in 2014 after expanding more modestly by only 0.4% in 2013."

"The improving economic growth outlook in Germany may result in more persistent euro strength, and reduced pressure upon the ECB to ease monetary policy further in the near-term unless inflation continues to surprise to the downside. From that perspective the modest 0.1 point upward revision to the annual rate of euro-zone headline inflation in January to 0.8% may at the margin have eased pressure on the ECB to ease policy again at next week’s meeting providing support for the euro."
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