EUR Daily Updates

05 February 2018

The euro is mostly flat today, while selling off against safe havens including the Swiss franc and the Japanese yen. Last Friday, EUR/USD sold off sharply following US non-farm payroll numbers that were ahead of expectations. Following the sell-off, EUR/USD and the euro more broadly are no longer looking technically overbought on a daily chart. Despite recent weakness, the euro remains in a bull market. This week, upcoming services and composite PMIs should continue to indicate strong growth ahead. Last week, Eurozone manufacturing PMIs were at multi-year highs. While the ECB has been increasingly vocal regarding the euro and weak inflation, this has not derailed the rally so far. Looking at German coalition news, Angela Merkel has failed to meet her own coalition agreement deadline. According to  Bloomberg, talks are continuing today. As most significant issues (such as family reunions for refugees) have been addressed, the two sides are expected to strike a deal shortly. Our short-term and medium-term outlook on the euro remains bullish.  

EUR/USD is currently flat and trading above 1.2450. The euro is down against the yen, with EUR/JPY trading above 136.960. Finally, the euro is flat against the pound, with EUR/GBP above 0.8820.

Looking at economic data from the Eurozone this week, we’ll see PMI surveys as well as data from the German manufacturing and export sector. Later today, we’ll see Eurozone Markit services and composite PMIs. We’ll also see retail sales and the sentix investor confidence survey. Tomorrow, we’ll see German factory orders. On Wednesday, we’ll see German industrial production. There is also a non-monetary policy-related ECB meeting scheduled for that day. On Thursday, we’ll see German trade balances. Last week, Eurozone Markit manufacturing PMIs signaled strong future growth.

Updated 
Short term outlook
Bullish

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. 

Medium term outlook
Bullish

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. 

Updated