The euro is weaker against the US dollar and the Japanese yen today, while strengthening against the British pound. The euro is currently undergoing a small correction as markets await tomorrow's US Federal Reserve interest rate decision and statement. Looking at technical indicators, the euro is no longer looking overbought on a daily chart. In the near future, we believe the common currency is likely to resume strengthening. Upcoming economic data this week should support the view that the "Euroboom" is set to continue. Later today, we'll see consumer and business sentiment indicators for the Eurozone. Consensus estimates are high, and strong data is supportive for the common currency. Looking at the latest German coalition news, talks between the SPD and CDU have faltered due to the issue of refugee rights. While the two sides claimed they were close to a deal yesterday, The Telegraph is reporting that talks have broken down. Our short-term and medium-term outlook on the euro remains bullish.
EUR/USD is currently down and trading above 1.2350. The euro is down against the yen, with EUR/JPY trading above 134.30. Finally, the euro is up against the pound, with EUR/GBP above 0.880.
Looking at Eurozone economic data this week, markets will be watching GDP growth, inflation and retail sales figures. Later today, we’ll see the German consumer price index. We’ll also get Eurozone Q4 GDP growth as well as services sentiment, industrial confidence and economic sentiment. On Wednesday, we’ll see German retail sales and unemployment. We’ll also get Eurozone unemployment and the consumer price index. On Thursday we’ll see Eurozone Markit manufacturing PMIs. Finally on Friday, we’ll see Eurozone producer prices. Last week, German business sentiment rose to 11-year highs.
As the euro strengthens, we are upgrading the currency to bullish in the short-term. Looking at various technical indicators, the currency is looking overbought. This is based on a daily chart of the euro currency index.
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.