Today's euro exchange rates: EUR forecasted lower in short and medium term; ZEW data proves supportive
The euro (Currency:EUR) has lost ground to the US dollar today; however the EUR has registered gains against the British pound on the back of today's inflation data and against a RBA-hampered Australian currency.
The euro dollar exchange rate is 0.12 pct in the red at 1.3349.
The euro pound exchange rate is 0.8 pct higher at 0.8570.
The euro Australian dollar rate is 0.69 pct higher at 1.4100.
Note that the above are spot market quotes; your bank will add their own spread to these wholesale market numbers. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here.
ZEW data sets a positive tone
Setting a positive tone for the euro today was the release of positive economic sentiment data from Germany.
Germany's investor confidence rose more-than-expected in June, after remaining largely unchanged in the previous month, results of a survey by the Mannheim-based Centre for European Economic Research/ZEW showed on Tuesday.
The ZEW Indicator of Economic Sentiment climbed to 38.5 from 36.4 in May. Economists were looking for a score of 38.1. The latest reading is the highest since March.
"The German release was a notch above the estimate, while the Eurozone release beat the forecast. This will be followed by two key releases out of the US – Building Permits and Core CPI. The G8 wraps up a meeting in Northern Ireland, where discussions were held about an EU - US free trade pact," says Kenny Fisher at Oanda.
Euro shakes of dovish sounding Draghi
The ECB President said today that he is willing to consider more non-standard monetary policies if the current programs are not working. That the euro was not seriously hampered confirms just how resillient the shared currency is.
Draghi is not worried by the side effects of these policies (a weaker euro?), stating that:
"Some of those measures may have unintended consequences. This does not mean that they should not be used, but it does mean that we need to be aware of those consequences and manage them appropriately.”
Technicals: Euro to come under pressure in short term
Turning to the charts in an attempt to ascertain future direction in the euro dollar exchange rate Robo Forex tell us they are predicting further declines:
"Euro is still moving inside a narrow trading range near its top; the market couldn’t continue moving upwards. We think, today the price may fall down to break an ascending channel. Later, in our opinion, the pair may form a slight correction and then continue moving downwards to reach the target at 1.300."
Luc Luyet at MIG Bank agrees:
"EUR/USD is consolidating after the break of the resistance at 1.3319. Resistances can be found at 1.3390 and 1.3434 (20/02/2013 high).
The short-term technical configuration remains positive as long as the support at 1.3266 holds.
"Initial supports are given by the rising trendlines.
"In the medium-term, the recent price action from 1.2746 (04/04/2013 low) is viewed as a corrective phase within a larger downtrend.
"However, the recent new highs above the resistance at 1.3319 (25/02/2013 high) indicates a persistent short-term buying interest. A key
resistance lies at 1.3520."
In a longer term perspective, KBC Markets analyst Piet Lammens says:
"We still don’t see a big case for a sustained rebound of the euro against the dollar and continue to favour the downside
for EUR/USD.
"Despite some mixed US eco data of late, the US economy will keep the lead on the way to recovery and consequently the Fed will reduce its
policy stimulation first.
"We consider recent US eco weakness to be a soft patch while the European economy is still firmly in recession, keeping the ECB in easing mode even after the May rate cut."