The euro fell yesterday and is up this morning. Looking at recent news, German consumer confidence was lower than expectations. Despite the disappointment, German consumer confidence is usually not a significant driver for the euro. Instead, the common currency fell more as a function of US dollar and British pound strength. Overall, economic data from the Eurozone has been solid and upcoming data this week should point to continued growth. Our medium-term outlook on the euro remains bullish.
The EUR/USD exchange rate is now trading above 1.1860. Looking at EUR/JPY, the pair is up today and is currently trading just above 132.260. The euro is down against the pound, with EUR/GBP now trading above 0.8840.
This week's economic data from the Eurozone includes consumer confidence and inflation figures. German consumer confidence missed expectations (10.7 vs. 10.8 expected). Later today, 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.