EUR/USD

The Euro took a tumble in yesterday’s trading session against the US dollar and is under further pressure today after a disappointing round of business data and a bullish stance from the US Federal Reserve which will ensure rates continue to rise in the world’s largest economy.

Germany’s IFO Business Climate Index, a key indicator of business confidence  hit the market at 91.1 against analysts expectations for a figure of 91.4 although higher than last months figure of 90.1 .The Current Assessment number eased to 93.9 from 94.1 the previous month and below analysts’ estimations of 95.00.

A series of data in recent weeks has been signalling strong business activity in the US such as a tight labour market, strong retail sales and higher monthly producer prices. The hotter-than-expected data has helped to keep the dollar stronger, but also added to concerns that the U.S. central bank will likely need to keep rates higher for longer if inflation is to reach the Fed's target.

This was evidence in yesterday’s minutes meeting release where there was a unanimous decision amongst Federal reserve board members to keep hiking rates until inflation is under control.

"The Fed minutes were just released indicating that a few officials could have supported a 50-bps hike in the last meeting, though most backed the 25bps outcome. This is certainly supportive of the U.S. dollar, which is slightly stronger now against most other currencies," said Minh Trang, senior FX trader at Silicon Valley Bank in Santa Clara, California.

"The theme throughout February has been a bias towards higher rates, and these minutes are consistent with that perspective." He added.

Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of CPI figures from the Eurozone which are expected to come in slightly above expectations and may support the Euro.

An even bigger round of news will come in during the American session with the release of GDP figures from the US and a strong round of numbers will only add fuel to the fire for the case to push rates higher.