The euro is mostly higher today. The common currency is currently making gains versus all major currencies except the British pound. Last week, the euro sold off sharply thanks to unchanged guidance from the ECB. Expectations were running high for ECB President Draghi to hint at ending the bank's asset buying program. Instead, Draghi's remarks suggested that the Governing Council had failed to discuss the mechanics of ending the program (currently scheduled to end in September 2018). For now, the Governing Council appears to be more focused on deteriorating Eurozone economic growth.
While the euro is enjoying a small relief rally today, the currency is likely to enter a medium-term bearish trend later this year as growth decelerates from its previous peak. This week, we'll see important sentiment figures relating to Eurozone manufacturing and we'll also see German and Eurozone inflation figures. Expectations for sentiment are forecast to remain unchanged from previous figures for March. Our short-term outlook on the euro is bearish, while our medium-term outlook remains neutral.
EUR/USD is up slightly and trading above 1.2130. The euro is up slightly against the yen, with EUR/JPY trading above 132.440. Finally, the euro is down slightly against the pound, with EUR/GBP above 0.880.
Looking at this week’s economic events from the Eurozone, the most important data releases include manufacturing sentiment and inflation figures. Later today, we’ll see German retail sales (March), and the German consumer price index for April. On Wednesday, we’ll see Eurozone Markit manufacturing PMIs for April, as well as Eurozone Q1 GDP growth. We’ll also hear a speech from the German Bundesbank’s Weidmann. On Thursday, we’ll see the Eurozone consumer price index for April and producer prices for March. We’ll also hear speeches from the ECB’s Constancio and Cœuré. On Friday, we’ll see Markit services and composite PMIs for April. We’ll also see Eurozone retail sales for March and hear another speech from the German Bundesbank’s Weidmann. Last week, the ECB failed to meet expectations regarding future monetary tightening.
As the euro runs out of steam, we are now bearish on the currency 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 trades sideways, we are now neutral on the currency 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.