Analysts Warn That EUR Gains Could be Temporary

The euro hit a two-week high against the US dollar and a seven-week high vs. the Japanese yen yesterday, as investors became increasingly convinced that the ECB will soon move in to lower borrowing costs in Spain and Italy. The EUR/USD shot up more than 100 pips during European trading, eventually reaching above the 1.2470 level. Against the yen, the euro advanced 107 pips to trade as high as 99.03 during the afternoon session. Today, traders will want to note that some analysts are viewing the euro's recent gains as temporary, given the lack of positive economic news coming out of the euro-zone. Today, traders will want to pay attention to a batch of US news set to be released during afternoon trading. Any better than expected results could cause the euro to reverse some of its recent gains. In addition, tomorrow is likely to be a volatile day for the common-currency, as manufacturing and service data from the euro-zone, France and Germany are scheduled to be announced.

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