Analysts at Bank of Tokyo Mitsubishi explained that the euro is continuing to strengthen against the US dollar supported by heightened risk aversion amongst global investors. Key Quotes: "The euro-zone’s sizeable current account surplus and liquidation of short positioning built up in recent years are contributing to the euro’s outperformance. Even heightened concerns over the health of European banks have failed to undermine the euro for now." "Financial market developments are likely to remain the key driver for EUR/USD direction in the week ahead overshadowing macro fundamentals. Fed Chair Yellen failed to provide reassurance to global investors in her semi-annual testimony." "She delivered a more cautious outlook for monetary policy signalling that if tighter financial conditions persist it will increase downside risks to economic growth and dampen the need for tighter monetary policy." "However, the Fed remains optimistic that the economy will continue to expand moderately in the coming years justifying gradual monetary tightening. US yields have declined sharply, dragged lower by safe haven demand and dampened Fed rate hike expectations, which is undermining support for the US dollar. The latest FOMC minutes and US retail sales report will be in focus in the week ahead. Risk aversion is not yet intense enough to trigger a flight to US dollars" For more information, read our latest forex news.