Euro Outlook: Is it time for Draghi to get aggressive on the Euro?

A look at the currency markets in late morning London time shows:

The euro dollar exchange rate is 0.26 pct higher at 1.3812. The euro pound exchange rate is 0.15 pct higher at 0.8536 and the euro Aussie dollar is 0.24 pct up at 1.4346.  

Keep in Mind: The above are inter-bank quotations. Your bank will levy a spread when passing a retail rate; hence why you never get close to the market rate. An independent FX provider will however guarantee to undercut your bank's offer, delivering up to 5% more currency. Find out more here.

Usually we would expect a currency to react to the downside to poor PMI data as was the case in Europe this morning, yet the euro is as rampant as it has been all week.

But, Boris Schlossberg at BK Asset Management reckons the big boys at the ECB may be forced to act against this strength:

"Up to now the ECB has been remarkably nonchalant about the strengthening of the euro, but Mario Draghi may change his tone at the next month's press conference if the central bank forecasts suggest the recovery is in danger of faltering.

"Many analysts have pointed out that part of the reason for euro's strength has been the fact that the ECB has quietly but steadily shrunk its balance sheet while the other G-3 central banks continue to expand theirs. Therefore it will interesting to see if Mr. Draghi assumes a much more aggressively accommodative posture at the next month's meeting."

Short-term outlook for the euro

Next, we consider the short-term technical forecasts pertaining to the euro dollar exchange rate for today.

Geoffrey Yu at UBS says:

"With bullish trend in place, the next major resistance focus is at 1.3833. There’s scope for a setback to unwind the overextended upside conditions from here, with support at 1.3742 ahead of 1.3651."

Confirming the bullish bias for the euro rate today are ICN Financial who say:

"The bearish attempts yesterday remained limited above 1.3710 levels keeping the overall bullish bias, as we might witness today an attempt to the upside. In fact, level 1.3835 represented in 113% Fibonacci is significant as it will determine the extension of the upside move. Anyhow, the bullish possibility remains valid unless the pair breaks 1.3710 levels."

RoboForex further back the EUR bull case saying:

"Euro is still forming an ascending structure.  We think, today the price may continue moving upwards to reach the level of 1.3800. Later, in our opinion, the pair may fall down a little and then start another ascending impulse to reach a new maximum."