- Euro to Dollar exchange rate: 1.1407
- Euro to Pound Sterling exchange rate: 0.8855
Eurozone industrial production data for May has smashed expectations confirming that the Euro's ongoing rally has solid foundations and does not appear to be a temporary feature of foreign exchange markets.
Eurostat report month-on-month industrial production figures read at 4.0%, ahead of forecasts for 3.6%.
The annualised figure reads at 1.3%, ahead of forecasts for 1.1%.
"Perhaps the only thing hotter than the summer temps is the euro. Europe’s single currency soared to 14-month highs overnight, boosted by a strengthening fundamental backdrop in Europe. The 1.3% rise in euro zone industrial production topped expectations and marked the highest all year," says analyst Joe Manimbo at Western Union.
The data will go some way in confirming the Eurozone economic growth story is intact which in turn will fuel expectations for the European Central Bank to exit its very generous monetary policy stance.
It is these expectations that have fuelled the Euro rally of 2017 and today's data could simply add fuel to the fire.
“The EUR/USD advanced to 1.1489 on broad-based USD sell-off. Call options are supportive of the positive trend above the 1.1400/1.1425 region at today’s expiry. There are no option barriers at 1.15, stops are eyed above. Surpassing the 1.15 level should pave the way toward 1.1616,” says Ipek Ozkardeskaya at London Capital Group.
The EUR/GBP is meanwhile up at 0.8940 and expected to keep going higher.
“Momentum indicators are strong with the MACD lines and Stochastics turning higher once more with the RSI only in the low 60s. This all suggests there is upside potential in a move,” says Richard Perry at Hantec Markets.
Importantly for Euro-bulls, support has held firm for a couple of weeks around £0.8750 and a closing breakout would imply at least 100 pips of initial upside.
“Furthermore, corrections are increasingly being bought into at higher levels,” says Perry.
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