The EURUSD is closing in on multi-month highs as the pair reaches for the 1.2100 figure amidst very bullish sentiment in the market. The market clearly wants to take the pair higher on the assumption the better growth in the region will force the ECB to taper QE sooner rather than later. ECB officials, meanwhile, are wary of the rising euro, fearing that it may reignite deflationary pressures in the region, but with growth at decade level highs, they may have no choice but to tighten policy over the near term horizon and the market is clearly anticipating the move.

Tomorrow the market will get a look at German Unemployment data which should confirm that labor demand in EZ powerhouse economy remains buoyant and could serve as a catalyst for move higher that could take the pair through the 1.2100 figure.