The euro is selling off against all major currencies except the Japanese yen today. Yesterday, the euro strengthened after ECB President Mario Draghi suggested that the recent stock market downturn does not change the ECB's outlook. The euro strengthened as Draghi's statement increases the odds of the Bank ending its quantitative easing program later this year. While both Eurozone growth and inflation figures have deteriorated sharply this year, hopes for monetary policy tightening continue to support the common currency.
Turning to news and economic data, we covered Chinese President Xi's latest comments in our US dollar daily update. Recent trade balance figures from Germany failed to meet expectations, suggesting that the Eurozone's biggest economy is decelerating this year. In recent history, trade balance figures from many countries have been below expectations, suggesting a global slowdown. As the euro makes a series of lower-highs, we expect to downgrade our (medium-term) bullish outlook at some point in the near future. For now, our short-term outlook on the euro is neutral, while our medium-term outlook is bullish.
EUR/USD is flat and trading above 1.2310. The euro is up against the yen, with EUR/JPY trading above 131.980. Finally, the euro is down against the pound, with EUR/GBP above 0.870.
Looking at economic data from the Eurozone, traders will be focused on trade balance numbers. German February trade balances (€19.2b vs. €21.4b expected) were lower than expectations. On Thursday, we'll see Eurozone industrial production and see policy meeting accounts from the last ECB meeting. On Friday, we'll see the second-take of German consumer price index figures for March and Eurozone trade balances. Last week, German factory orders and industrial production missed expectations by a wide margin.
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.