Euro rate today (25/10): EUR refuses to be shunted lower - but how long can the strength last?

A look at the currency markets on Friday morning shows:

The euro dollar exchange rate is 0.06 pct lower on a daily basis at 1.3792.
The euro pound exchange rate is 0.03 pct higher at 0.8522.
The euro Australian dollar rate is 0.26 pct higher at 1.4521.

NB: All quotes here are taken from the spot markets; your bank will affix a discretionary spread to the numbers. However, an FCA-regulated independent FX provider will undercut your bank's offer, thus delivering you up to 5% more currency. Please learn more here.

Traders continue to favour the euro

If you want an insight behind the positive forces underpinning euro strength, have a look at the technical summary behind the EUR/USD pairing:

Boris Schlossberg at BK Asset Management gives his explanation as to why the euro is currently so popular:

"The euro remained generally well bid despite a weaker than expected IFO reading as currency market traders continued to make it their favourite anti-dollar trade."

FX traders continue to favour the currency in light of expectations that the FED will continue its QE program well into the start of next year.

The single currency continues to power higher because market participants see no change in policy from EZ monetary officials.

Will the ECB start to talk down the euro?

Schlossberg's colleague, Kathy Lien, gives a great insight into the euro's strength.

She says the ECB will be eyeing out the 1.4 level before they attempt to talk the shared currency lower.

Lien says:

"Many investors are scratching heads wondering how much higher can the euro rise. First and foremost, it is important to understand that trends in the currency market can last far longer than most people would anticipate but in the case of the EUR/USD, certain factors could quickly sweep in to limit the upside in the pair including a turn in economic data.

"However the primary catalyst for a top in the EUR/USD should be ECB criticism.  Back in February, after the EUR/USD hit a high of 1.37, ECB President Draghi called the euro appreciation a sign of confidence but he also warned that exchange rates should reflect fundamentals.  

"More specifically, he said, "the real and nominal exchange rates of the euro are near their long-term average but if the appreciation is sustained, it may alter their view on price stability."  

"When those comments were made, the EUR/USD was trading a touch below 1.36, which suggests to us that they are comfortable with EUR/USD at 1.37.  

"However the currency pair is now trading at 1.38 and we have not heard a peep from the central bank and the reason we believe is because the pain threshold for the ECB is closer 1.40.  

"If EUR/USD rises another 2 cents, the ECB could start to talk down the currency and that would be a very strong motivation for investors to stop buying euros."