EUR/USD reached its highest level since January 8 last week and from a fundamental perspective there is now little to stop it breaching the 1.23 level and challenging the 1.2349 year-to-date high touched on January 6.
The main argument against further strength for the pair is that a tightening of US monetary policy is on the way. Note, though, that any such move is still many months away and has, anyway, been largely priced in by the markets.
Moreover, while members of the European Central Bank’s policy-setting Governing Council have been sounding less hawkish recently, the forward-looking Eurozone economic data have been improving. Germany’s Ifo business climate indicator, for example, came in above expectations last week, and so did the institute’s expectations index.