Euro Exchange Rates Today: EUR Firmer Aided by IP Data, European Equity Markets Softer

Modified: Monday, 10 March 2014 22:26 GMT
Written by: Gary Howes

Euro rates have today found support from some encouraging industrial production figures released by the Eurozone. A look at the charts confirms that the outlook for the EUR remains constructive.

In late morning trade in London we see:

The euro dollar exchange rate (EUR/USD) is trading a smidge higher than witnessed at last night's close having reached 1.3679.
The euro pound exchange rate (EUR/GBP) is 0.08 pct in the red at 0.8338.
The euro to Australian dollar (EUR/AUD) is now 0.6 pct higher at 15193.

(NB: Our EUR quotes are taken from the spot markets; your bank will subtract a discretionary spread when passing on their retail rate. However, an independent FX provider will guarantee to undercut your bank's offer and deliver you up to 5% more currency. Please learn more here.)

Key to the EUR's positive footing is a surprisingly positive Industrial Production (YoY) (Nov) release out of the Eurozone which came in at +3%, well above expectations for growth of 1.4%.

Industrial Production (MoM) (Nov) came in at 1.8 pct, ahead of expectations for growth at 1.4%.

The decent data has ensure that the outlook for the euro exchange rates remains constructive:

"Rebounding IP data for the eurozone and flat retail sales in the US are likely to keep EUR-USD on a firmer footing today, although we think that a break much above 1.37 may remain challenging in the near term," say UniCredit Bank.

We would have expected such a decent data outturn to have had a greater impact on the shared currency, however the below comment from Lloyds Bank gives away the sense that markets had been expecting this surprise:

"Industrial production data released so far in the Eurozone for November have been decent, with upside surprises for both Germany and France.

"This suggests a possible upside surprise to the aggregate print today, and should keep EUR/USD well supported. US data will also be important on EUR/USD; further weakness in US data could see EUR/USD edge higher but the 1.3760 area looks likely to be initial resistance."

Technical outlook for the euro dollar exchange rate

Here are a couple of forecasts for the euro dollar rate:

ICN Financial say, "the pair traded weakly to the downside yesterday but remained limited above the key support of the ascending channel as showing on graph.

"Based on the technical analysis, if trading remained within the ascending channel we stay positive and expect an upside move unless the pair breaks 1.3520 levels represented in 61.8% correction showing on graph.

"Over intraday basis, stabilizing above 1.3590 will support these expectations."

Ipek Ozkardeskaya at Swissquote Research says:

"EURUSD trending slightly above key uptrend support at 1.3600 (helping recovery from the sharp decline). Trend and momentum indicators are mixed, with MACD precariously close to crossing over the zeroline.

"Yet with uptrend channel undamaged we believe the bulls will continue to dominate and expect a challenge to 1.3900 (11-month top)."

Confidence in European markets remains

A key driver to euro strength over the past year has been a resurgence in Eurozone equities.

Today we are seeing softer sentiment:

"The UK opened lower today, on a day when UK CPI and RPI come out as well as US retail sales. This on the back of online retailer ASOS posting as 38% increase in 4 months retail sales, above expectations, and giving a picture of retail trends in a market where it is key that retailers meet their projected earnings targets but consumers are increasingly looking for greater value, convince and choose to shop online," says Farhan Ahmad, a dealer at Tradenext.

The British Retail Consortium (BRC) reported that the sales of online non-food items rose by 19% in December.

This could prove to be a double edged sword. Although the large retailers with online services and the increasingly popular “click and collect” option may benefit from increased sales; it means the high street (the back bone of UK retails) may feel the pinch.

"The BRC reported that high streets saw a 3.7% fall in footfall, while visitors to large shopping malls were down 1.8%. With similar falls in numbers in October and November it makes a whole quarter of falling victor numbers and possibly revenues," says Ahmad.