Outlook for the euro exchange rates today; EUR/USD could test recent lows at 1.3550

By Will Peters

euro rate outlook for today

Euro rates are today trading softer amidst an environment of US dollar strength. At present only the GBP appears to trade in a positive correlation with the USD while the EUR tends to head in the opposite direction.

The EUR/USD inched lower over the last 24 hours after failing to break conclusively above resistance at 1.3680 in yesterday’s early North American trade, our latest quotes from the market show:

  • The euro dollar exchange rate is 0.66 pct down on last night's close at 1.3590.
  • The euro pound exchange rate is 0.06 pct lower at 0.8315.
  • The euro Australian dollar exchange rate is 0.1 pct lower at 1.5247.

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.

The all-round strength of the USD has attracted the lions share of currency market interest over the course of the past 24 hours; a scenario that has seen the euro lose out.

Further weighing on euro rates today was news that German GDP rose by 0.4% y/y for 2013, below consensus calls for a 0.5% rise.

From a technical perspective the outlook for the euro remain challenging. Matt Weller at GFT says, "the pair is nearing the 1.3600 round handle, which may provide minor support in the short-term; however, if that level is broken, a stronger continuation down toward the recent lows at 1.3550 is likely."

According to Ipek Ozkardeskaya at Swissquote Research the euro's failure to clear resistance above 1.3700 against the US dollar has revved up the EUR-bears, further damaging the outlook for the euro.

"EURUSD started the day heavily sold from 1.3681 to 1.3608 (at the time of writing). The MACD gained momentum on the downside. While the markets are explicitly looking for reasons to go long EUR, we believe that the upside potential is still in place if EURUSD holds ground above the uptrend channel floor (1.3560)," says Ozkardeskaya.

Meanwhile, the euro pound exchange rate (EUR/GBP) eased from 0.83247 as offers above the 21-dma aggressively jumped in the chart.

"The MACD will step back into the bearish zone for a daily close below 0.82750. In the option markets, the bets are skewed on the downside. Selling pressure is building at 0.83000/200 band," says a note on the euro rate today issued by Swissquote.

Looking ahead, it is data out of the US that will be of importance. The Empire manufacturing survey provides an early sense of where the US economy is in January (market expects the index to rise to 3.5 this month from 0.98 in December).

PPI is expected to rise 0.4% in December (both at 8.30ET).

The Fed releases the Beige book at 14.00ET.

In Canada, December existing home sales are out at 9.00ET.

Fed-speak today comes from Evans and Lockhart (dovish, non-voters) at 12.50ET and 17.45ET respectively.

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