The euro strengthened sharply last Friday and is down slightly this morning. The currency strengthened following good IFO survey data, showing that German businesses remain optimistic for the future. As Eurozone economic data has been surprisingly strong in recent weeks, the euro has been supported as a result. Earlier today, EUR/USD was at a two-year high above 1.19. Looking at news, Merkel received some good news over the weekend as the SPD agreed to consider another 'grand coalition'. While the SPD had been opposed to another grand coalition following recent elections, the party is changing its stance in order to help political stability in the Eurozone's most important economy.
The EUR/USD exchange rate is now trading above 1.1910. Looking at EUR/JPY, the pair is down today and is currently trading just above 132.70. The euro is up against the pound, with EUR/GBP now trading above 0.8940.
This week's economic data from the Eurozone includes consumer confidence and inflation figures. On Monday, we'll see the results of the EU's latest financial stability review. On Tuesday, we'll get German consumer confidence. On Wednesday, we'll see Eurozone business and consumer confidence. More importantly, we'll also see German CPI figures. On Thursday, we'll see German unemployment, German retail sales, French CPI and Eurozone CPI. Finally on Friday, we'll see German and Eurozone Markit manufacturing PMIs. Last week, strong data helped the ongoing euro rally.
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.