Euro Exchange Rate: EUR Exchange Rates Strong But EUR Losses Ground vs the British Pound (GBP)

Modified: Monday, 10 March 2014 21:09 GMT
Written by: Gary Howes

Euro rates have today only seen softness against the British pound today with strength against the other key currencies being maintained.

The German IFO survey was stronger than expected yesterday across all the components, that helped EUR/USD gains, however EUR/USD once again failed to break higher finding resistance around the 1.3770/75 area.

The pound sterling vs euro exchange rate saw support at 1.21 hold, and with extra demand for GBP surrounding the Vodafone deal we would expect the rate to remain well supported.

A look at the euro exchange rate complex today shows:

In addition to German IFO, inflation numbers for January were also revised marginally higher however that saw little market reaction.

"We still view the timelier February ‘flash’ CPI estimate due out at the end of the week remains the prime focus and will likely be key for market expectation ahead of next week’s ECB meeting. With few key releases from the Euro area today, US data releases this afternoon may trigger some movement in EUR/USD. But we expect the 1.3770/80 area to remain decent resistance, and the 1.3680 should provide good initial support," says a note issued by Lloyds Bank Research today.

Risk appetite and technicals to keep the euro dollar exchange rate supported

Kathy Lien at BK Asset Management confirms she is bullish on the Euro dollar rate at present.

Party of the reason for this bullishness is that the USD is predicted to remain weak: "don't expect much in the way of upside surprises in U.S. data this week. House prices, consumer confidence, durable goods, the Chicago PMI index new and pending home sales are scheduled for release. Most of these reports will be affected by the brutal winter weather so the risk of a downside surprise should keep the dollar under pressure," says Lien.

Yet despite the weakness in U.S. data, investors are looking past the short term factors and looking forward to the end of winter.

Their optimism drove stocks to a record high today and the market's appetite for risk should lend support to the euro.

"From a technical perspective, as long as EUR/USD holds above 1.37, the near term breakout is intact, allowing the currency to take a stab at 1.38," says Lien.