EUR Daily Updates

11 January 2018

The euro is mixed this morning. The common currency is slightly lower against the US dollar, while it is strengthening against the British pound and the yen. Yesterday, the currency was sharply higher against the US dollar following reports that China was set to curtail purchases of US treasury bonds. The US dollar fell sharply on the news, leading to a stronger euro. This morning, Chinese authorities have denied the report, and EUR/USD is back to around 1.1940. Thus yesterday's move higher has been fully reversed. Looking at economic data, we'll see Eurozone industrial production figures in a few hours. Given very strong numbers from Germany earlier this week, the Eurozone figures should be very strong as well. Looking at German coalition talks,  Reuters is reporting that the CSU/CDU and the SPD have agreed on cleaner car engines. Other issues including immigration and business regulation have yet to be resolved. Our short-term and medium-term outlook on the currency remains bullish. 

EUR/USD is slightly weaker this morning and currently trading above 1.1940. The euro is up against the yen, with EUR/JPY trading above 133.50. Finally, the euro is up against the pound, with EUR/GBP above 0.8850. 

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). Later today, 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