Euro Hits New High

The euro holds onto its gains above the 1.45-level slightly beneath its all-time high against the dollar at 1.4528. Traders will look ahead to next week’s ECB monetary policy meeting, in which change is expected. However, markets will closely scrutinize commentary from ECB President Trichet to determine whether another rate hike will be signaled. With recent inflation in the Eurozone ticking higher, we look for the ECB to maintain its current tightening cycle and hint at the possibility of a 25-basis point rate hike before year-end to 4.25%.