While we can get behind the reasoning for the Euro surge in the previous week, the latest push above 1.4000 is harder to digest, and we have opted to establish a playable counter-trend position… The Euro remains well bid into the new week, with the single currency attempting to establish back above 1.4000 despite some Euro negative news in the form of a Moody’s Greece downgrade. The relative strength in the Euro comes on the back of a much more hawkish European Central Bank in the previous week, which has now signaled a move towards higher interest rates. Language from the ECB which included “strong vigilance” was seen driving the market towards 1.4000 on Thursday and things remained bid into Friday, with a slew of ECB officials confirming the need to start focusing on the normalization of rates in light of rising inflationary pressures. ECB’s Gonzalez Paramo was the firmest of the bunch after saying that “the risks to inflation are on the upside and it is the mission of the ECB to prevent those from materializing.” On the data front, Eurozone sentix has come in better than expected, and has helped to keep the market propped somewhat intraday.

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