EUR/USD wavers directionless amid a moderate risk-on mood
- The Euro bounced up from 1.1650 but remains unable to regain the 1.1700 level.
- Signs of some de-escalation of the Sino-US trade rift have improved market sentiment on Monday.
- German Producer Prices Index contracted further in September, weighing on the Euro recovery.
EUR/USD remains practically flat on Monday's early European opening, trading at 1.1665 at the moment of writing. The pair bounced at 1.1650 earlier on the day, favoured by a somewhat brighter market mood on signs of easing tensions between the US and China, but it is lacking upside momentum.
Investors sighed with relief as US President Donald Trump acknowledged on Friday that raising tariffs on China to 100%, as he threatened two weeks ago, is unsustainable. Beyond that, US Treasury Secretary Scott Bessent confirmed that same day that he will meet Chinese Vice Premier He Lifeng this week, which suggests that the world's two major economies are looking to de-escalate their trade disputes.
In the US, concerns of bad loans at regional banks, which rattled markets late last week, seem to have subsided as quarterly earnings show that credit and revenues among large banks remain solid. This has contributed to improving the market sentiment, adding pressure on the safe-haven US Dollar.
In the Eurozone, German Producer Prices Index (PPI) MoM contracted against expectations for the third consecutive month in September, which is likely to add weight to the Euro. Apart from that, the economic calendar will be thin on Monday in Europe, with the speeches of the European Central Bank (ECB) board members Isabel Schnabel and Joachim Nagel as the only events worth mentioning, while in the US, there will be no relevant releases.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | 0.06% | 0.06% | 0.05% | -0.02% | -0.12% | 0.03% | |
| EUR | 0.04% | 0.13% | 0.11% | 0.09% | 0.03% | -0.09% | 0.08% | |
| GBP | -0.06% | -0.13% | 0.00% | -0.03% | -0.09% | -0.20% | -0.03% | |
| JPY | -0.06% | -0.11% | 0.00% | -0.01% | -0.08% | -0.25% | -0.04% | |
| CAD | -0.05% | -0.09% | 0.03% | 0.00% | -0.01% | -0.19% | -0.01% | |
| AUD | 0.02% | -0.03% | 0.09% | 0.08% | 0.00% | -0.13% | 0.05% | |
| NZD | 0.12% | 0.09% | 0.20% | 0.25% | 0.19% | 0.13% | 0.17% | |
| CHF | -0.03% | -0.08% | 0.03% | 0.04% | 0.01% | -0.05% | -0.17% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: Euro ticks up on risk appetite
- The improved market sentiment has provided some impetus to the Euro as the US Dollar gives away gains, but the pair's recovery is lacking fundamental drivers, which leaves price action trapped within Friday's range. The pair seems to be looking for direction, with investors wary of selling the US Dollar, awaiting further news about the US-China trade relationship.
- Economic figures released by Destatis on Monday revealed that the Producer Price Index (PPI) edged 0.1% down in Germany in September, against market expectations of a 0.1% increase. These figures follow declines of 0.5% and 0.1% in August and July, respectively. Year-on-year, the PPI fell 1.7%, following a 2.2% contraction in August.
- Macroeconomic data from China released earlier on Monday revealed that the Gross Domestic Product grew at a 1.1% pace in the third quarter, beating expectations of a 0.8% increase, while industrial production yearly accelerated to 6.5%, and Retail Sales YoY increased 3% in September, both of them beating expectations and showing that the economy remained resilient in the face of higher tariffs from the US. The positive risk sentiment has boosted China proxies AUD and NZD, while weighing on the US Dollar.
Technical Analysis: EUR/USD is testing reverse trendline, near 1.1650
EUR/USD hit the target of the Double Bottom pattern at 1.1730 last week and pulled lower. The pair is now testing the broken trendline support at the 1.1650 area, which keeps holding bears for now, although upside attempts remain limited. The 4-hour Relative Strength Index (RSI) is hovering around the 50 level, which shows a lack of clear bias.
A confirmation below the mentioned 1.1650, which is also the area where bulls were capped on October 9 and 15, would put bears in control and increase pressure towards the October 15 low, near 1.1600, and the October 14 low in the area of 1.1545. On the upside, intraday highs are at 1.1675, well below Friday's high, near 1.1730. An unlikely rally beyond these levels would bring the September 30 high, near 1.1775, back into play.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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