The euro train marches on for now

It’s been a blockbuster of a week for the euro and it’s not over just yet. EUR/USD is now up another 0.6% to 1.0854 currently and if my calculations are correct, is poised to post its best weekly performance since December 2008. In just a span of five days, we’re suddenly closer to 1.1000 than we are to parity talk. Wild.

While this is all coming amid a softer dollar as well, it can’t be denied that the large chunk of the gains owes to a strong bids in the euro currency itself. The technical and fundamental stars lined up rather perfectly for the pair and it really doesn’t get any better than that.

So, where to now?

One can look towards the November high of 1.0936 but I wouldn’t pin that as being too crucial a technical level. As things stand, the 200-week moving average at 1.0872 is going to be one to watch ahead of the weekly close today. If we do get a break there, it’s upwards and onwards to 1.1000 next.

The primary concern for the euro is that there are still some potential setbacks in the pipeline for the next few weeks.

Trump tariffs is of course one of them but markets are evidently less afraid now seeing how he has dealt with the whole situation involving Canada and Mexico. So, there’s always wiggle room no matter what he says.

But the bigger risk event for the euro will be the German parliamentary vote on the debt brake reform. As mentioned earlier this week:

“For such a proposal, it will require two-thirds majority to be approved. And the numbers making up that will have to be from both the Bundestag (lower house) and Bundesrat (upper house). In total, that translates to 489 out of 733 lawmakers. The current CDU and CSU alliance as well as the SPD can gather about 403 lawmakers. So, they will still need 86 more votes in their favour from the FDP and/or Greens. The FDP is unlikely to back the reform and for now, the Greens are not yet fully on board.”

The vote will take place on 18 March with discussions set to begin next week on 13 March. Depending on how talks go, we can see that play into the mood for the euro over the next two weeks.

This article was written by Justin Low at www.forexlive.com.