Energy stocks .SXEP were among the top-gaining sectors, up 0.56 as oil prices rebounded. It gained around 10% during the summer.
Recently, the euro's increase in value even accelerated after breaking the psychological bar of US$1.15.
During the first months of this year the rate of the two currencies kept oscillating around 1.06 that is close to parity.
'The Australian dollar has appreciated over recent months, partly reflecting a lower United States dollar.
How far can it go?
Turning to Thursday's impending European Central Bank (ECB) meeting, which is being closely watched for hints on a potential withdrawal of its extremely easy monetary policy, Cryan noted that the regional currency reflects the expectation of a "gradual" change in interest rates.
It is only the third official trading day in September and we've already gotten a taste of the wild swings that can be expected in currencies over the next few weeks. Mention of concerns about FX markets overshooting (excessive euro appreciation.). To be reminded the major world banks at the beginning of this year were contemplating a full parity (1:1) before December. That, we think, won't stop FX investors from worrying about potential commentary pushing back against Euro strength, therefore we think EURUSD will remain range-bound into Thursday' meeting.
- In what looks to be a coordinated move, senior German figures are pressing the European Central Bank to tighten Euro-Zone monetary policy. If they act as markets now expect them to do, and set a path for tampering their extraordinarily accommodating policy, the euro will continue strengthening. But the ECB's target is inflation, not growth, and it is far from certain it will meet its goal over coming years. Banks have so far underperformed the broader market and are relatively cheap. Nevertheless, a stronger euro will set in motion adverse forces.
Yields on lower-rated debt also rebounded.
There is more to it. The higher the euro, the more expensive products and services get for non-euro customers, which might affect exports from the currency union.
As a result of this and persistent Brexit concerns, most analysts predict the Pound Euro exchange rate will continue to weaken in the long-term.
Investors however strongly hung on to Draghi's comments on the economy. What was happening then was that eligible Belgian and Irish bonds were nearly exhausted and it would have been necessary to replace them with other countries' bonds whose supply was more abundant (viz. Italy and France).
If Mr Draghi and his colleagues were to bring their asset purchases to a premature end, let alone raise interest rates, it would simply send the euro higher still and make their job even harder.
The focus now shifts to the European Central Bank meeting.
Wednesday's Eurozone data from July was disappointing too. The euro will likely clear positions on both directions before taking a steady path. Risk averse traders could prefer turning flat before a potentially bumpy session on Thursday. Yet this is not a free good, particularly when it comes to market conditioning and responses.
Fresh inflation forecasts from the Bank's economists, which will be released during Draghi's press conference Thursday, are expected to trim June's projections of a 2017 average of 1.5% and a 2018 dip to 1.3%, as those figures were based on an euro/dollar rate in the 1.09 to 1.11 region and Brent crude prices in the $51.00 range.
Will the German elections this month play a role in the ECB's decision?