The euro continues to make gains against the US dollar today, while trading mixed against other currencies. The euro is currently selling off against the British pound and the Australian dollar. Today is an important day for the common currency thanks to the upcoming ECB meeting. Markets will be paying close attention to ECB President Mario Draghi's comments relating to asset purchases, growth and inflation. While the European Central Bank can no longer justify its asset buying program following strong Eurozone growth, the strength of the euro is a risk for inflation. Any suggestions of ending the asset buying program later this year will likely result in more euro strength. Looking at the latest data, Eurozone Markit PMIs continue to shine. The composite figures were once again ahead of bullish expectations. Our short-term and medium-term outlook on the currency remains bullish.
EUR/USD is currently up and trading above 1.2420. The euro is flat against the yen, with EUR/JPY trading above 135.50. Finally, the euro is down slightly against the pound, with EUR/GBP above 0.870.
Looking at Eurozone economic data and events, markets will be watching this week's ECB meeting and PMIs. The German ZEW economic sentiment survey (20.4 vs. 17.8 expected) and Eurozone consumer confidence (1.3 vs. 0.6 expected) were higher than expected. Composite Markit PMIs (58.6 vs. 57.9 expected) were ahead of expectations. Later today, we'll see German Gfk 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 the euro continues to strengthen, 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.