The euro fell yesterday and is up slightly this morning. The common currency hit a two-month peak of 1.1961 against the US dollar yesterday. While market-moving news has been limited in the past 24 hours, the common currency has been supported by hopes for a 'grand coalition' in Germany and strong GDP growth. In a longer commentary published yesterday, we explained how strong growth and politics will help the euro remain on a strengthening path. Q4 GDP growth is likely to remain strong, while Macron's calls for greater unification between EU member states looks closer to becoming reality. Our medium-term outlook on the currency remains bullish.
The EUR/USD exchange rate is now trading above 1.190. Looking at EUR/JPY, the pair is up today and is currently trading just above 132.40. 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. Later today, 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 the euro runs out of steam, we are downgrading the currency to neutral in the short-term. Looking at various technical indicators, the currency is trading within a normal range. This is based on a daily chart of the euro currency index.
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.