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Euro Strengthens As German Economic Sentiment Improves Notably

The euro appreciated against its most major opponents in the European session on Tuesday, as German economic confidence strengthened to the highest level since 2015.

Survey results from the ZEW – Leibniz Centre for European Economic Research showed that the economic sentiment index rose more-than-expected to 26.7 in January from 10.7 in December. This was the highest since July 2015, when the score was 29.7. Economists had forecast a reading of 15.0 for January.

The indicator for the current situation improved sharply to -9.5 in January from -19.9 a month ago. The expected level was -13.5.

The economic sentiment index for euro area climbed 14.4 points to 25.6 in January. The indicator for current situation gained 4.8 to -9.9.

The euro showed mixed trading against its major opponents in the Asian session. While it fell against the yen and the franc, it held steady against the greenback and the pound.

The euro climbed to 1.1110 against the greenback, marking a 4-day high. The euro is seen facing resistance around the 1.12 mark.

Reversing from an 8-day low of 121.87 hit at 3:30 am ET, the euro rebounded to 122.27 against the yen. Next key resistance for the euro is likely seen around the 125.00 level.

The Bank of Japan maintained its monetary policy but upgraded its growth outlook.

The Policy Board of the BoJ voted 7-2 to retain the interest rate at -0.1 percent on current accounts that financial institutions maintain at the central bank.

The euro edged higher to 1.0749 against the franc, after falling to 1.0731 at 3:15 am ET. On the upside, 1.09 is possibly seen as the next resistance level for the euro.

Extending early strength, the euro hit a 4-day high of 1.4517 against the loonie. If the euro extends rally, 1.47 is possibly seen as its next resistance level.

The euro held steady against the kiwi and the aussie, following a rally to a 5-day high of 1.6829 and a 6-day high of 1.6199, respectively. The euro had ended Monday’s trading at 1.6790 against the kiwi and 1.6142 versus the aussie.

In contrast, the euro weakened to a 4-day low of 0.8503 against the pound from yesterday’s closing quote of 0.8527. The next possible support for the euro is seen around the 0.84 level.

Data from the Office for National Statistics showed that the UK employment rate hit a record high and the jobless rate remained unchanged in three months to November.

In three months to November, the employment rate rose by 0.6 percentage points annually to a record 76.3 percent. And the unemployment rate held steady at 3.8 percent, in line with expectations.

Looking ahead, Canada manufacturing sales for November are scheduled for release in the New York session.

The material has been provided by InstaForex Company – www.instaforex.com