The euro reached the highest level in five months against the US dollar today on the speculation that the European Central Bank will raise the interest rates on the next meeting of its policy makers. The currency currently retreated closer to the opening level.

Both European Central Bank Executive Board member Gertrude Tumpel-Gugerell and Governing Council member Yves Mersch spoke yesterday about the necessity to contain the inflation. Jeremy Stretch, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce, explained the jump of the euro:

It’s a risk-on and monetary tightening story. Euro-dollar is a beneficiary of that, and looks like it’s going to continue to trade higher.

EUR/USD traded at 1.4213 as of 13:25 GMT today, near its opening rate of 1.4217, after it earlier jumped as high as 1.4248, the highest level since November 4.

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