EUR/USD

The Euro has continued its strength against the US dollar as we enter today’s trading session after better-than-expected Euro wide GDP figures yesterday raised expectations that the European Central Bank will follow up with more rate rises after their bumper 75 bais point rate hike earlier this week

Annual GDP figures hit the market yesterday at 4.1% against analysts expectations for a number of 3.9% which means we may see another 75 point hike which will bring the ECB benchmark rate closer to that of the US Federal Reserve which in theory should lend some support to the. Euro

Whether this will be enough to support the Euro over the medium to long term is still an open question especially with record energy prices currently sweeping the Eurozone and ECB president Christine Lagarde noted the Central Bank has many tools at her disposal but was unable to control high energy prices.

"I cannot reduce the price of energy," she said. "I cannot convince the big players of this world to reduce gas prices. I cannot reform the electricity market. And I am very pleased to see that the European Commission is considering steps to that effect because monetary policy is not going to reduce the price of energy.

Rising energy prices run the risk of causing a raft of issues and Mrs Lagarde added that if gas prices continue to "skyrocket", that would be "recessionary".

Looking further ahead today, the main driver of the EUR/USD currency pair will be the release of a monetary statement and press release after the meeting by members of the Economic and Financial Affairs Council.

From the US there is no major economic news due to hit the market so we may see the Euro remain above parity as we head into the weekend