Are German business executives partying like its 1999? Well not quite - more like it is the year 2000. That was the last time before today that the IFO Current Assessment reading breached the 100 mark. In today's release  the number printed at 100.4 against expectations of 99.8 as the nascent German recovery is clearly gaining momentum. French business confidence also remained steady and only the Italians marred the trifecta as Italian consumer confidence slumped on rapidly rising oil prices.

Energy costs can be the one factor that could derail Eurozone recovery. While US has enjoyed inordinately balmy weather over the past few weeks, Europe has suffered through a severe cold front exacerbated by near record prices of crude. The higher euro has to some extent ameliorated the impact on consumer's budgets but if cold weather and high oil prices persist they could sharply curtail  any future Eurozone growth. Yesterday the Belgian Business Indicator which acts as canary in coal mine for many analysts looking to handicap future EZ growth because tiny Belgium does 90% of its trade with EU and is therefore highly sensitive to changes in demand,  recorded a negative surprise for the first time since August of 2004. Note that the Belgian Business Indicator was flashing green 3 months before evidence of recovery surfaced in the overall EZ reports. Nevertheless, the IFO numbers clearly signal that a lower euro and structural reforms in German labor markets may be finally paying dividends and euro bulls took the pair above the 1.2300 level in early European trade.

Trading for the rest of the day may pivot off the US Existing Home Sales report. Markets have become increasingly jittery about the slowdown in US Housing sector which has accounted for the majority of the growth in US GDP. Market players are bracing for a slightly lower result but if the report prints markedly worse than expectations then EUR/USD may rally further.

Across the pond, cable  pierced the 1.7900 figure after UK GDP came in a bit better than forecast at 0.6% versus 0.5%. The gain was largely due to increase in the services component which rose 0.9%. Additionally MPC minuets revealed that BOE voted to keep rates steady by 8-1 margin allaying fears of near term rate cut. The pound is approaching stiff resistance at the 1.7900 level, but steady UK data along with any negative surprises out of US could push the unit to the 1.8000 figure for the first time in months.

Boris Schlossberg is a Senior Currency Strategist at FXCM.