Euro at two-and-a-half month high

The euro was at a two-and-a-half month high on Friday, keeping a hold of the hefty gains made a day earlier after data on improved business sentiment in Germany encouraged traders to cover their positions, reports Forex.

The euro rallied one per cent on Thursday, easily spiking above the Ichimoku cloud on the daily charts. It also breached its three-month moving average after it failed to do so in three attempts earlier this week. Credit Agricole’s Mitul Kotecha said that after it broke above key levels it appears as though the euro’s rally is still going, but that she feels the momentum will fade at the beginning of next week.

Chartists also pointed to the resistance at $1.3436, a 50 per cent retracement of its slide between October and January. On Friday, the euro was trading around $1.3372, with not much change from the late New York levels.

Data from the Ifo think tank in Munich on German business sentiment triggered the euro and raised hopes that the economy in Germany is improving and will stay clear of recession in spite of the problems other eurozone countries are faced with. However, the European Commission issued a warning that the region is spiralling towards its second recession in just three years, clouding the outlook for the single currency over the long term.