Improving Mood Helps Euro Forex Market

• Common Currency Steady Above Key Level
• Pound Also Higher Despite Poor Data
• Stocks Trying to Close Out Positive Week

The US Dollar continued to weaken slightly moving into Friday as the door opened for the Euro and other major currencies in the forex market to gain some of the ground they had lost in recent weeks. Both the Euro and Pound have advanced, the latter moving upward despite relatively poor data coming from the UK in respect of retail sales. European figures were slightly better while the main focus of the day will remain on the US and geopolitical events. At the same time, the mood on Wall Street is continuing to be more positive with stocks looking to close on a second positive week in succession. 

Euro Holding Above Higher Level

It has been a very tumultuous period of the Euro which has been dominated in recent times by an extremely strong Dollar. This weighed heavily on the common currency and those forex trading it. An increasing wave of positive momentum, coupled with stronger treasury yields that have pressured the Dollar to move lower, have provided some relief for the Euro, however. 

PMIs from Germany, the largest economy in the bloc, also pushed the currency higher. These were a slight improvement on what analysts had expected and proved a timely boost for the Euro which is now managing to hold above the 1.10 level, a point it had struggled to capture and stay above in the last few weeks. Data from the US as well as any further developments in Eastern European news could still have a moving impact on this market.

Disappointing Retail Sales Fail to Stop Sterling

Also benefiting from a slightly weaker Dollar is the Pound. The GBP/USD moved closer to 1.32 early on Friday despite the fact that retail sales numbers from the UK failed to impress. These missed the market expectation which was a 0.6% gain and instead posted a 0.3% decline.

Manufacturing PMIs for early March in the UK also declined from their February levels as the Pound gathers its first positive momentum in some time. Like the Euro, this move will also be tested by the dynamics of the greenback and particularly how it finishes out the week. 

Wall Street Looks to End on High Note

Early trading on Wall Street is again largely positive on a week that has seen more up days than down. All three major indices gained strongly on Thursday to rebound from some midweek losses. The Nasdaq was the biggest winner on the day with a close to 2% rally as positive feeling took hold.

While forex brokers have seen the Dollar weaken on higher treasury yields, the street has felt more optimism with stocks closing in on their second consecutive positive week and the major indices sitting not far from record levels. There is still caution though as the recent volatility stays fresh in the mind of investors.