Euro Exchange Rates Today: EUR/GBP and EUR/USD Tipped to Head Higher as Momentum Returns
- Written by: Gary Howes
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Euro rates are today higher as we continue to witness US dollar weakness following on from Friday's poor December nonfarm payrolls report.
Monday sees the euro remaining well supported in this USD-negative environment:
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Euro exchange rates start the week well supported
Better industrial production data in November from most of the Eurozone combined with the disappointment with the US employment report suggests the EUR will start the week well supported, though the Italian production data today could potentially buck the improving trend elsewhere.
"While the EUR still looks a little high based on yield spreads, there is likely to be some reluctance to sell EUR as long as the market remains uncertain about further Fed easing and the Eurozone data is improving. There may consequently be scope for EUR/USD to extend its recovery toward 1.3760, but we would not expect any sustained gains beyond there," says a foreign exchange rate note issued by Lloyds Bank today.
Euro forecasted higher vs US dollar
Monday's technical exchange rate forecasts show the EUR/USD to be better placed; "EUR/USD recovered to 1.3687 (appr. 21-dma) post-NFPs. The bearish momentum lost pace as the fibo 38.2% (1.3665) was broken on the upside. Option bids are seen at 1.3610/1.3650/1.3700," says a note issued by Swissquote Research.
Euro vs Pound Sterling Strenthens
Meanwhile the outlook for the euro sterling exchange rate (EUR/GBP) has improved markedly following on from Friday's poor industrial production figures out of the UK.
"Short term UK yields fell in line with US yields on Friday, and against this background it now looks difficult to achieve any further extension of EUR/GBP weakness in the absence of more data. The 0.83-0.8320 area should nevertheless provide good resistance to a EUR/GBP recovery ahead of this week’s CPI and retail sales data," say Lloyds Bank Research.
Weakness in retail sales as suggested by some surveys could see a more extended reversal of the recent EUR/GBP decline.
For today, there is little on the calendar that seems likely to trigger significant movement.
Euro / Australian dollar under pressure
One of the big winners of the Friday data disappointment was the Australian dollar.
Aud benefited on the interpretation that poor US data means the US Federal Reserve's money taps will stay open for longer.
Thus money will continue to head to Australia to take advantage of superior interest rates.
Also aiding the Aus dollar higher was the short-squeeze phenomenon. So many traders are betting against the Australian dollar that when we get a surprise like this we see a rush to cover exposure.
Thus the AUD was bid higher in quick fashion when Friday's surprise was revealed.
"The Aussie meanwhile appears to be benefiting from a bout of short covering both against the greenback and on the crosses. Friday's weak US data provided the initial excuse for the move, but today's price action suggests that the move could extend. The pair has rebounded to 9045 in London dealing and if it can clear the 9050 barrier it could triggers a squeeze all the way to 9100 as the day proceeds," says Boris Schlossberg at BK Asset Management.
