Forex: Euro hits 14-month high against the US Dollar

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The much anticipated interest rate decision by the European Central Bank will be released on Thursday. Expectations have been building up in the European trading session, boosting the Euro against the US Dollar, creating a new 14-month high.

The European Central Bank is expected to raise interest rates for the first time since July 2008 in order to curb rising inflation. It is predicted that the benchmark will go up by 25 basis points versus the previous record low of 1.0%.

Despite the struggling peripheral economies, optimism still reigns. Today all eyes were on Portugal’s bond auction which proved to be successful for the government as it needed to raise funds through its sale of 6 and 12-months Treasury Bills. 1.005 billion Euros worth of bills were sold but the cost was higher than previous auctions as yields rose significantly.

EURUSD hit a new 14-month high peaking at 1.4315 gaining over 50 pips since the open of the European session at 1.4265. EURGBP also surged by 52 pips to hit 0.8784 from its early morning session low of 0.8725.