With the Christmas/New Year breaks limiting currency market movement over the last few weeks, Euro fluctuations have been a little stilted.
The common currency posted a five-day decline against a broadly stronger US Dollar on Friday but was little changed against the Pound.
But as markets return to normal, we forecast that the Euro will come under pressure against its main rivals as the impact of positive domestic data is outweighed by US developments.
Federal Reserve easing speculation is mounting, and with every piece of positive US data adding to the case for stimulus being tapered, reports which meet or exceed expectations could push the ‘Greenback’ higher against its peers.
However, we do predict that the Euro will come out on top against the Pound as investors pull back from the British asset amid speculation that its recent rally has been excessive.
Today the Euro has been affected by a mixed bag of economic data for the Eurozone.
While French services PMI surprised to the upside and Eurozone services PMI met estimates, the German and Italian measures fell slightly short of estimates.
However, the Euro was supported by upbeat comments issued with the figures and a separate report showing improved investor confidence in the Eurozone.
The Sentix measure of investor confidence in the currency bloc advanced from 8.0 in December to 11 in January, considerably stronger than the 9.5 reading forecast.
Meanwhile, economist Chris Williamson said this of the services reports; ‘The PMI surveys indicate that the Eurozone recovery gained further traction at the end of last year. December saw the second largest increase in business activity since June 2011 and rounded off the best quarter for two-and-a-half years.’
Williamson continued; ‘the PMI signalled a strong turnaround in the health of the economy during the course of 2013, and a stronger growth looks likely for the first quarter of 2014.’
Later today additional Euro movement may occur in response to German inflation data.
Current Euro (EUR) Exchange Rates
< Lower > Higher
The Euro/US Dollar Exchange Rate is currently in the region of: 1.3606 >
The Euro/Pound Sterling Exchange Rate is currently in the region of: 0.8317 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.5217 >
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6458 >
The US Dollar/Euro Exchange Rate is currently in the region of: 0.7353 <
The Pound Sterling /Euro Exchange Rate is currently in the region of: 1.2025 <
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6572 <
The New Zealand Dollar/Euro Exchange Rate is currently in the region of: 0.6079 <
(Correct as of 11:00 GMT)
Key events for the week ahead
Tuesday: German unemployment
Eurozone producer price index
Wednesday: Eurozone retail sales
Eurozone unemployment rate
German factory orders
Thursday: Eurozone economic/industrial/consumer confidence
European Central Bank rate decision
Friday: German retail sales