EUR/USD SOARS TO 14-MONTH HIGH

The euro gained further traction against the dollar Thursday after European Central Bank (ECB) President Mario Draghi presented an optimistic view of the regional economy.

At the ECB Forum in Portugal, Draghi said that the central bank’s stimulus program was bringing about growth and inflation to a region still struggling with the financial crisis. Draghi maintained that quantitative easing would remain until inflation moved higher.

German consumer prices strengthened more than expected this month, preliminary data from the Federal Statistics Office showed Thursday. The consumer price index rose 0.2% in June, following a 0.2% decline the previous month. In annualized terms, this translated into a gain of 1.6%.

Germany’s harmonized index of consumer prices (HICP), which calculates inflation using a method consistent throughout the euro area, rose 1.5% year-over-year, official data showed.

Broad measures of Eurozone economic growth also strengthened in June. Gauges for business climate, economic sentiment, industrial confidence, and services sentiment all ticked higher.

Meanwhile, US gross domestic product (GDP) was revised slightly higher in the first quarter to reflect the growth of 1.4%, Commerce Department data showed. Analysts in a median estimate forecast no change from the second estimate of 1.2%, which itself was an upward revision.

The dollar also gained ground against the yen Thursday after Japanese annual retail sales rose for the seventh consecutive month. Receipts at retail stores climbed 2% annually in May, following a 3.2% surge the previous month, the Ministry of Economy, Trade and Industry said.

USDJPY

The dollar rose sharply against the Japanese yen, with the USD/JPY exchange rate climbing 0.4% to 112.74. That was the pair's highest level in over a month. Prices are considered bullish above the 112.00 mark. However, short-term momentum may be limited by the dollar's persistent weakness. Immediate resistance is seen at 113.00. 

EUR/USD

The euro is trading at fresh 14-month highs against the dollar, as the pair continued to pulsate higher. The EUR/USD exchange rate reached a session high of 1.1440. It was last seen trading at 1.1405, having gained 0.2% on the day. The euro is up more than 300 pips over the last week. Although gains are expected to continue, upward momentum may be challenged by overbought pressures.

USD/CAD

The Canadian dollar has also been a prime benefactor of the greenback’s recent woes. The USD/CAD exchange rate is down around 500 pips over the past three weeks. The loonie is being helped by a stronger economy and rate-hike bets involving the Bank of Canada (BOC). The BOC has a 50-50 chance of raising rates next month, according to analysts. Traders should, therefore, circle the next BOC monetary policy meeting on their calendars, as it could have significant implications on the USD/CAD exchange rate.