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The euro scaled a high not seen in three years on Monday as optimism surrounding growth bolstered expectations of tighter monetary policy from the European Central bank. The possibility of the establishment a pro-European Union coalition in Germany also bolstered the confidence in the region.
The single currency rose as much as 0.8 percent to $1.22965 at one point on Monday, a price that was last observed in December 2014, before ECB's announcement of its government bond purchase program.
With the global economy showing signs of sustained recovery and growth, global stock benchmarks surged to new record highs.Given this, investors are now pricing in the unwinding of central banks' stimulus. This view was further solidified last week by the minutes of the ECB which indicated policymakers may soon begin to prepare for a reduction in economic support.
In Asia, Bank of Japan Governor Haruhiko Kuroda offered a positive outlook on his country's economy and inflation on Monday, driving the yen to a multi-month high against the U.S. dollar.
Aside from the positive economic picture, progress in the coalition talks between German Chancellor Angela Merkel's CDU party and the Social Democrats has also eased concerns regarding the political stability of the eurozone's biggest economy. SPD's pro-European stance also solidified the case for investment in the euro.
