The euro rose yesterday and continues to strengthen this morning. The currency is primarily stronger as a function of weakness in the US dollar. Yesterday, Eurozone consumer confidence was better than expected (0.1 vs. -0.8). The euro has been supported by strong GDP growth figures in the recent past. Looking at news, there are a limited number of market-moving updates from the Eurozone. According to Bloomberg, Germany's SPD continues to oppose a 'grand coalition' with Merkel's party but could back her efforts to form a minority government.
The EUR/USD exchange rate is now trading above 1.1830. Looking at EUR/JPY, the pair is up slightly today and is currently trading just above 131.70. The euro is up against the pound, with EUR/GBP now trading above 0.890.
This week’s Eurozone events and economic data includes a speech by Draghi, the EU’s financial stability review, Eurozone Markit PMIs and German IFO numbers. On Monday Draghi expressed his optimism for higher wages and backed Germany's stance on EU deposit insurance. German producer prices matched expectations (2.7%). Eurozone consumer confidence was stronger than expected (0.1 vs. -0.8 expected). Later today, we’ll see German GDP and Eurozone Markit PMIs. We’ll also see the ECB’s policy meeting accounts. Lastly, on Friday we’ll see IFO survey data. Last week, Eurozone GDP numbers met expectations.
As Eurozone economic data continues to be strong, we are upgrading our outlook to bullish. Note that the euro is trading within normal ranges. Our analysis is based on various technical indicators when looking at a weekly chart.