Euro Rates Today: EUR Faces Positive Outlook as Technicals Remain Bullishly Configured

The euro exchange rate complex is today edging higher as momentum remains firmly in the shared currency's favour.

Euro exchange rates have made a good start to the week amid Moody’s revised up the Spain’s government bond rating to Baa2 with positive outlook on Friday (5 minutes before the NY close).

The better-than-expected IFO survey in Germany sent EUR/USD to 1.3771 this morning, a stone’s throw lower than last week high of 1.3773.

A look at the euro exchange rate complex shows:

Outlook remains constructive for euro dollar exchange rate

EUR technical indicators remain comfortably in the bullish zone, yet the event risk intensifies.

"ECB officials continue talking about weakness in Euro-zone’s consumer prices and ECB’s determination to act against. The possibility of an ECB rate action in March 6th meeting inevitably keep the EUR-bulls balanced. At the current levels, we expect traders to continue selling the rallies into the March 6th meeting," says Ipek Ozkardeskaya at Swissquote Bank.

Also backing further gains in the euro dollar rate is Luc Luyet at MIG Bank:

"EUR/USD remains supported by its rising channel (see also the support at 1.3692). The break of the initial resistance at 1.3728 (intraday high) validates a tiny base formation, which favours a test of the resistance at 1.3773.

"Another resistance can be found at 1.3819. The break to the upside out of the mediumterm horizontal range between 1.3477 and 1.3739 indicates a persistent buying interest. In the longer term, we favour a broad horizontal range between 1.3296 (07/11/2014 low) and 1.3893 (27/12/2013 high)."

Busy week ahead for EUR

This week will be a busy one for the euro with a number of market moving economic reports scheduled for release. This past week we learned that manufacturing and service sector activity slowed while investor confidence weakened.  

Germany's IFO report, unemployment rate, retail sales and final Q4 GDP numbers are due for release along with consumer prices and confidence from the Eurozone. For the most part, we expect mixed releases that will show the Eurozone recovery on shaky ground.

"EUR/USD is trading firmly above 1.3700 and as long as the currency pair holds above this level, a test of 1.38 is likely," says Kathy Lien at BK Asset Management.