The euro has been slowly strengthening over the past few days. This morning, the common currency is higher against the US dollar and the pound. While the euro was looking oversold a few days ago, this is the no longer the case as the currency has been rebounding. Earlier today, German GDP growth and inflation figures met expectations. German economic growth has been strong this year and estimates for future growth continue to be revised higher. Later today, we'll see the second estimate for the Eurozone's Q3 GDP growth and industrial production. In general, the euro remains well supported by improving data.
The EUR/USD exchange rate is now trading above 1.1690. Looking at EUR/JPY, the pair is up today and is currently trading just above 132.90. The euro is up against the pound, with EUR/GBP now trading below 0.8920.
This is a critical week for the Eurozone, given that both GDP and inflation numbers will be announced. On Tuesday, we’ll get the second estimate for Q3 Eurozone GDP growth and industrial production figures. German GDP growth (2.3% vs. 2.3% expected) and inflation figures (1.5% vs. 1.5% expected) both met expectations. On Wednesday, we’ll see Eurozone trade balances and French CPI numbers. On Thursday, we’ll see German wholesale prices and Eurozone consumer price index numbers. Last week, Eurozone retail sales, composite PMIs and producer prices all beat expectations.
As the euro rebounds on strong economic data, we are upgrading the currency to bullish in the short-term. Looking at various technical indicators, the currency was looking oversold earlier but is now trading within normal conditions.
As the euro rebounds following the disappointment of the recent ECB meeting, we are upgrading our outlook to neutral. While the currency looked overbought earlier, this is no longer the case today and the euro is trading within normal ranges. Our analysis is based on various technical indicators when looking at a weekly chart.