Daily analysis from Anpron for EUR/USD – 08.03.2011.

    The EUR/USD shot up over 80 pips before correcting itself. Currently the pair is trading around the 1.3980 level.

    In addition, the dollar fell against the euro as news of a possible euro zone interest rate hike next month continues to draw investors to the 17-nation currency. However, by noon-trading yesterday the dollar managed to erase all of its losses after oil prices eased back from almost $107 barrel. Crude oil is currently trading below $105 a barrel.

    The greenback also remained under broad selling pressure on expectations that U.S. interest rates will stay at very low levels for some time. Low rates reduce the attractiveness of U.S. assets and ease demand for the dollars to buy them.

     The euro also rose after an index measuring European investor confidence rose to a 3-and-a-half year high. The index, which measures sentiment in the euro region, increased to 17.1 for March from 16.7 in February, Limburg, a German-based Sentix research institute, said today. 

      Traders have started to focus more on fundamentals such as economic growth and short-term interest rates. That shift, just getting underway, could take the shine off the soaring EUR in the coming months. A stronger currency is important to the euro zone because it entices foreign investors to Treasury debt that finances the nation's record budget deficit. The downside is that it may restrain profit growth at companies with international sales by making European exports more expensive.

The EUR/USD pair today probably continues to increase about the 1.4030 level or increase about 1.4080.