The euro rally continues and the common currency is rising against most of its major global peers including the US dollar, the pound and the yen. Beyond the relief following Puigdemont's decision to 'delay' the outcome of the referendum, expectations relating to a potential ECB tapering announcement are rising. After falling into oversold territory earlier, the ongoing euro rally doesn't need many reasons to keep strengthening. Thus ECB-related expectations are likely to remain a tailwind for the common currency. We upgraded our short-term outlook to bullish today.
The EUR/USD exchange rate is now above 1.1860. Looking at EUR/JPY, the pair rose yesterday (but is down this morning) and is currently just below 133.20. Lastly, the euro is also up against the pound (but down slightly this morning), with EUR/GBP now trading above 0.8960.
This is a fairly light week for the euro in terms of economic data releases. The most important day this week is Thursday, which will include industrial production figures and a speech by Draghi. Speculators who are long euros continue to patiently wait for the ECB to announce that it will taper its quantitative easing program later this year. Thus Draghi’s speech will be watched closely for any clues that the upcoming ECB meeting will contain the big announcement that speculators have been waiting for.