Euro Advances Amid Strong German Ifo Survey, Lagarde's Remarks

The euro drifted higher against its major counterparts in the European session on Monday, as German business sentiment improved in May and European Central Bank President Christine Lagarde said that the central bank is planning to exit negative interest rates by the end of the third quarter.

In a blog post, Lagarde said that the central bank is expected to end net purchases under the APP very early in the third quarter.

A lift-off in the interest rate is likely at the meeting in July, in line with the forward guidance, Lagarde told.

"Based on the current outlook, we are likely to be in a position to exit negative interest rates by the end of the third quarter."

Survey results from the Ifo institute showed that Germany's business climate index rose to 93.0 points in May from a revised 91.9 points in April. Economists had expected a score of 91.4.

The World Economic Forum's annual meeting will be held in Switzerland this week after a gap of two years amid the Covid-19 pandemic.

Business and political leaders will be gathering in Davos, where Ukraine and its war with Russia would be at the top of the agenda.

The euro rose to 0.8495 against the pound, from a 6-day low of 0.8433 seen at 3:15 am ET. If the euro rises further, 0.86 is likely seen as its next resistance level.

The euro touched a 5-day high of 136.30 against the yen and a 4-day high of 1.0335 against the franc, off its early lows of 134.66 and 1.0274, respectively. The euro is seen finding resistance around 138.00 against the yen and 1.06 against the franc.

The euro firmed to 1.0688 against the greenback, its highest level since April 26. Against the loonie, it approached nearly a 2-week high of 1.3663. The euro is likely to find resistance around 1.08 against the greenback and 1.38 against the loonie.

The single currency rebounded to 1.5022 against the aussie and 1.6498 against the kiwi, from its prior multi-week lows of 1.4885 and 1.6367, respectively. The euro is poised to test resistance around 1.53 against the aussie and 1.68 against the kiwi.