The euro is mostly mixed today. The currency is flat against major peers including the US dollar, British pound and Japanese yen. Yesterday, 56% of SPD delegates voted to pursue formal talks with Angela Merkel's CDU/CSU party. The proportion of SPD delegates voting for another coalition deal is fairly low, and may explain why the euro has not strengthened more substantially today. As another German coalition government is looking more likely, euro investors can look forward to political stability. Both parties fared poorly in national elections held last year. For the past few months, Germany has operated without a ruling government. Our short-term and medium-term outlook on the currency remains bullish.
EUR/USD is currently up and trading above 1.2220. The euro is flat against the yen, with EUR/JPY trading above 135.50. Finally, the euro is flat against the pound, with EUR/GBP above 0.8810.
Looking at Eurozone economic data and events, markets will be watching this week's ECB meeting and PMIs. Tomorrow, we'll see the German ZEW survey and Eurozone consumer confidence. On Wednesday we'll see Markit PMIs (manufacturing, services, composite). On Thursday, we'll see German GkF consumer confidence and the IFO business survey. More importantly, traders will be paying close attention to the ECB's press release and statement. No changes in monetary policy are expected. Last week, Eurozone inflation figures met expectations.
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 currently looking overbought. Our analysis is based on various technical indicators when looking at a weekly chart.