After giving up much of its gains yesterday, the euro is strengthening once again today. The currency is particularly strong against safe havens including the US dollar, Japanese yen and the Swiss franc. Thanks to strong Eurozone growth expectations following good manufacturing PMIs, the euro remains in a bull market. Yesterday, German unemployment figures came in better than expected. The fact that the country's unemployment is at a historic low reinforces the current optimism for the region. Upcoming services PMIs later today should also point to continued economic growth. As we wrote earlier, strong performance in the Eurozone's underlying economy is fueling expectations that the ECB will end its asset buying program in the second half of this year. As such, the euro is expected to continue strengthening. Our short-term and medium-term outlook on the euro remains bullish.
EUR/USD is up this morning and currently trading above 1.2020. The euro is also up against the yen, with EUR/JPY trading above 135.30. Finally, the euro is up against the pound, with EUR/GBP above 0.8890.
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). German unemployment beat expectations (5.5% vs. 5.6% expected). Later today, 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. Inflation is expected to remain below the ECB's target rate. 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.