The euro is strengthening, but there is little cause for optimism.


The euro ends the week on a positive note amid widespread depreciation of the dollar after cautious signals from the US Federal Reserve System.

In the past three months, the single European currency has failed to get out of the range of $ 1.12- $ 1.15 primarily because of fears that the ECB will not dare to put an end to monetary stimuli in the foreseeable future. However, the pigeon tone of the Fed's protocol, released this week, caused a massive sell-off of the dollar, opening the euro to a maximum of $ 1.1580 and causing a 100-day moving average to break for the first time in three months.

Meanwhile, according to analysts, the growth potential of the euro is limited.

"At present, the single European currency is strengthening mainly due to the weakening of the dollar's position. The risk of taking profits in the $ 1.1620 area remains," said Chris Turner, ING's chief currency strategist in London.

"A weak macroeconomic forecast by the ECB is unlikely to allow the Old World to lure significant amounts of capital from American markets," the expert added.

"Despite the current rally, the euro remains under pressure due to depressing European statistics, especially from France and Germany. In addition, investors expect the ECB to continue to pursue a "soft" policy this year, which is likely to limit the upward potential of the European currency," he said.

The material has been provided by InstaForex Company -