The euro is mostly higher today - the common currency is making gains versus the US dollar, British pound and the Japanese yen. Note that the euro is currently lower against commodity currencies including the Australian dollar and the Canadian dollar. Yesterday, the currency weakened during US trading hours after US equity markets (such as the S&P 500) and commodities began selling off. Losses were fairly limited as the US dollar failed to move up meaningfully.
As we wrote in our US dollar daily update earlier today, the dollar has been relatively subdued during recent downturns. As a safe haven currency, the dollar tends to strengthen during times of peril. One interesting phenomenon to note is the surprising strength of emerging markets currencies (particularly those of Asian exporting countries) during recent downturns. As a "risk-on" currency, the euro tends to weaken when risk sentiment heads lower. Today, the euro has made up some of its previous losses. 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 up against the yen, with EUR/JPY trading above 130.40. Finally, the euro is flat against the pound, with EUR/GBP above 0.8750.
Looking at economic data from the Eurozone, we’ll see figures relating to sentiment and inflation. German retail sales (1.3% vs. 2.2% expected) missed expectations by a wide margin. Later today, we’ll see Eurozone Markit manufacturing figures for March. On Wednesday, we’ll see the Eurozone consumer price index for March and Eurozone unemployment (February). On Thursday, we’ll see German factory orders (February) and Eurozone services and composite PMIs (March). We’ll also see Eurozone retail sales (February), the producer price index for February and the ECB’s monetary policy meeting accounts. On Friday, we’ll see German industrial production (February) and Eurozone changes in employment (Q1). Last week, German inflation missed consensus estimates.
As the euro runs out of steam, we are downgrading the currency to neutral in the short-term. Looking at various technical indicators, the currency is trading within normal conditions. 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 trading within normal conditions. Our analysis is based on various technical indicators when looking at a weekly chart.