The euro is selling off against the US dollar today while trading flat against most other major currencies. Last week, we warned that EUR/USD was looking fairly overbought and was due for a short-term pull back. Given the number of stops and options contracts around the 1.25 level, we also expected significant volatility as the pair approached this figure. After rising beyond 1.25 on Thursday and Friday last week, today EUR/USD is trading around 1.240. Thanks to strong economic data from the Eurozone, we expect the euro bull market to continue. Economic data this week should confirm the sunny outlook for the region's economy. Looking at the latest German coalition news, SPD leader Schulz is pushing Merkel to make concessions in order to form another grand coalition. Migration has been a particularly contentious issue. Our short-term and medium-term outlook on the euro remains bullish.
EUR/USD is currently down and trading above 1.2390. The euro is flat against the yen, with EUR/JPY trading above 134.90. Finally, the euro is slightly lower against the pound, with EUR/GBP above 0.8770.
Looking at Eurozone economic data this week, markets will be watching GDP growth, inflation and retail sales figures. On Tuesday, we’ll see the German consumer price index. We’ll also get Eurozone Q4 GDP growth as well as services sentiment, industrial confidence and economic sentiment. On Wednesday, we’ll see German retail sales and unemployment. We’ll also get Eurozone unemployment and the consumer price index. On Thursday we’ll see Eurozone Markit manufacturing PMIs. Finally on Friday, we’ll see Eurozone producer prices. Last week, German business sentiment rose to 11-year highs.