EUR Daily Updates

10 January 2018

The euro is mostly flat this morning, and is currently trading sideways against the US dollar, Australian dollar and Canadian dollar. The common currency is selling off against the pound. Looking at economic data from the  Eurozone, unemployment in the region matched expectations (8.7%) while German industrial production figures were much higher than expected. Thanks to Germany's strong manufacturing performance, optimism for Eurozone growth remains strong. While the euro rally has run out of steam in the last few days, we expect the longer-term rally to continue thanks to strong growth in the region and expectations for monetary tightening. Looking at political news, former Italian Prime Minister Silvio Berlusconi has said that Italy should not leave the euro. According to Reuters, some of his center-right coalition partners have disagreed with his views. Upcoming Italian elections in March are the next source of political risk for the euro. Our short-term and medium-term outlook on the currency remains bullish. 

EUR/USD is flat this morning and currently trading above 1.1930. The euro is down against the yen, with EUR/JPY trading above 133.50. Finally, the euro is up against the pound, with EUR/GBP above 0.8830. 

This is a relatively light week for economic data relating to the euro. Retail sales were higher than expectations (2.8% vs. 2.2% expected). Consumer confidence came within expectations (0.5%) while economic sentiment (116 vs. 114.8 expected) and business climate (1.66 vs. 1.51 expected) survey results were better than expected. The Sentix index was also above forecasts (32.9 vs. 31.5 expected). German trade balances were higher than estimates (€22.3B vs. €20.9B expected). Eurozone unemployment matched expectations (8.7%), while German industrial production beat estimates by a big margin (5.6% vs. 4.0% expected). Tomorrow, we'll get Eurozone industrial production. Last week, both manufacturing PMIs and inflation met expectations. 

Updated 
Short term outlook
Bullish

As the euro strengthens thanks to the strong outlook for its economy, 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. 

Medium term outlook
Bullish

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. 

Updated