After 6 punishing days of losses, the Euro is finally reversing the trend and has staged somewhat of a relief rally in today’s European trading session as traders book profits on the last trading day of the month.
The European currency was probably also helped by positive data release earlier today from the Eurozone which showed German GDP figures coming in at 3.7 percent which was slightly above analysts’ expectations for a number of 3.6 percent and well up from last month’s reading of 1.8 percent.
The same figures from the Eurozone as a whole hit the market at 5 percent which was in line with consensus and also higher than last month’s number of 4.7 percent.
Even after today’s bounce, the outlook for the Euro still remains angled towards the bearish side, as market participants will continue to favor the dollar amid geopolitical concerns and the Fed-ECB divergence with regards to lifting interest rates.
The mood may change on speculation the ECB could raise rates at some point towards the middle of the year while higher German yields, elevated inflation and a decent pace of the economic recovery in the region may also lend some support.
Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of the core personal consumption index from the US which is a key indicator of consumer spending and will be closely watched by the Fed in anticipation of the expected rate hike next month.
To finish off the trading month we will see the release of the Michigan consumer sediment index which should create some trading opportunities.