The euro has been falling all week. The currency was weaker yesterday and continues to sell off this morning. The primary culprit of euro weakness this week has been strength in the US dollar and the British pound. Looking at news, Bloomberg is reporting that Germany's SPD party has voted to pursue another 'grand coalition' with Angela Merkel's CDU/CSU. Details regarding the potential future coalition agreement remain unknown. Despite the positive news, the euro has been weak. Our short-term and medium-term outlook on the euro remains bullish.
The EUR/USD exchange rate is now trading above 1.1740. Looking at EUR/JPY, the pair is up today and is currently trading just above 133.30. The euro is down sharply against the pound, with EUR/GBP now trading above 0.8690.
This week’s Eurozone events and economic data includes PMIs, Eurozone GDP, and producer prices. Eurozone producer prices missed expectations (2.5% vs. 2.6% expected). Eurozone Markit Composite PMIs met expectations (57.5) while retail sales widely missed expectations (0.4% vs. 1.5% expected). Q3 Eurozone GDP growth figures beat expectations (2.6% vs. 2.5% expected). Later today, we’ll see German trade figures. Last week, Eurozone inflation and consumer confidence accelerated.
As the euro strengthens on good economic data, we are upgrading the currency to bullish 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 monetary policy expectations and economic growth power the euro, we are upgrading the outlook to bullish in the medium-term. Note that the euro is trading within normal ranges. Our analysis is based on various technical indicators when looking at a weekly chart.