The euro is currently near 3-year highs. If EUR/USD can close above 1.21, the pair will be at its highest levels since early 2015. Yesterday, the euro rose sharply and was supported by very strong composite PMI figures. As we wrote earlier this week, the euro bull market looks set to continue thanks to strong forward-looking data. While the euro was looking overbought earlier in the week based on technical factors, the currency is currently trading within a normal range. This morning, the common currency is currently weakening. Upcoming inflation figures will provide further cues for euro traders. Our short-term and medium-term outlook on the euro remains bullish.
EUR/USD is down this morning and currently trading above 1.2060. The euro is also up against the yen, with EUR/JPY trading above 136.40. Finally, the euro is down 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). Markit composite PMIs also beat expectations (58.1 vs. 58 expected). Finally, today 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. 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.