The euro soared yesterday and was particularly strong against the US dollar. The common currency was boosted by very strong Eurozone manufacturing PMIs. The forward-looking indicator bodes well for Eurozone economic growth this year, and the euro strengthened as a result. In other news, Reuters is reporting Benoit Coeure, head of the ECB's market operations, said that he saw a "reasonable chance" that bond purchases would end this September. Given the performance of the region's economy, the ECB has fewer reasons to continue its monetary stimulus program. ECB member Ewald Nowotny also claimed that the Bank may end its stimulus program this year if the economy continues to perform well. As wrote in a commentary yesterday, the narrowing gap between the US Federal Reserve and the ECB's future policies is helping the ongoing EUR/USD bull market. Our short-term and medium-term outlook on the euro remains bullish.
EUR/USD is flat this morning and currently trading above 1.2050. The euro is down slightly against the yen, with EUR/JPY trading above 135.30. Finally, the euro is down against the pound, with EUR/GBP above 0.8850.
This week's Eurozone economic data releases include CPI figures and survey results. Euro area manufacturing PMIs were very strong and met expectations (60.6). Later today, we'll see German unemployment. On Thursday we'll see Markit services and composite PMIs. Finally, Friday is the key day when we get Eurozone consumer price index and producer price figures. We'll also see German retail sales on Friday. Prior to the holidays, Eurozone CPI data met expectations (1.5%).
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.