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Forex - EUR/JPY hits 4-day high after EU raises 2011 growth forecast

Published 03/01/2011, 06:00 AM
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EUR/CHF
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Investing.com – The euro rallied to a four-day high against the yen on Tuesday, after the European Commission said that the euro zone economy is likely to grow faster than previously expected in 2011, due to a stronger global economy.

EUR/JPY hit 113.73 during European morning trade, the pair’s highest since February 23; the pair subsequently consolidated at 113.62, gaining 0.64%.

The pair was likely to find support at 112.86, the days low and resistance at 114.18, the high of February 2.

Earlier in the day, in its twice yearly forecast for the 27-nation European Union and the 17 countries using the euro, the EU executive said it expected the euro zone to grow 1.6% in 2011, up from 1.5% rate of growth it forecast in November.

"While exports should continue supporting the recovery, a rebalancing of growth towards domestic demand is expected for 2011, resulting in more sustainable growth," Economic and Monetary Affairs Commissioner Olli Rehn said.

The Commission said also said euro zone inflation, which the European Central Bank wants to keep below its 2% target rate, would be 2.2% this year, up from the 1.8% forecast in November.

The euro was also higher against the Swiss franc, with EUR/CHF climbing 0.39% to hit 1.2871.

Also Tuesday, data showed that the euro zone's manufacturing sector grew at the fastest pace in almost 11 years in February, driven by a record expansion in Germany.

A separate preliminary report showed that consumer price inflation in the euro zone rose 2.4% in February, to hit its highest level since October 2008.

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