The euro is mostly higher today. Looking at the euro against its major peers, the common currency is strengthening against the US dollar, the Canadian dollar and the British pound. Last week, the euro initially gained on rising risk sentiment and sold off sharply following the European Central Bank's monetary policy meeting. While expectations were high, ECB President Mario Draghi did not clearly define when the Bank's asset buying program would end. The euro sold off following the event. This week, euro speculators will be focused on upcoming inflation data. Thanks to the euro rally over the past year, inflation in the Eurozone has been relatively subdued. While commodity prices have accelerated in US dollar terms, gains in euro terms are much more limited. As a result, Eurozone inflation remains below the Bank's 2% target and is likely to remain weak. Our short-term outlook on the euro is neutral, while our medium-term outlook is bullish.
EUR/USD is up slightly and trading above 1.230. The euro is flat against the yen, with EUR/JPY trading above 131.380. Finally, the euro is up slightly against the pound, with EUR/GBP above 0.88870.
This is relatively light week for economic data from the Eurozone. Today, there is a Eurogroup meeting scheduled. The group is expected to discuss exchange rate and inflation developments ahead of upcoming meetings with the IMF in April. On Wednesday, we'll see the German harmonized index of consumer prices and the consumer price index for February. From the Eurozone, we'll get industrial production and employment change figures. The ECB's Draghi and Praet will also be speaking on that day. On Thursday, the ECB's Lautenschlaeger will deliver a speech. On Friday, we'll see German wholesale prices and the Eurozone consumer price index and labor costs. Last week, ECB President Draghi disappointed speculators looking for a more hawkish outlook on monetary policy.
As the euro continues to strengthen, we are upgrading the outlook to bullish in the medium-term. Note that the euro is currently trading within normal conditions. Our analysis is based on various technical indicators when looking at a weekly chart.