EUR/USD drifts lower on risk-off markets with delayed US economic data in focus
- The Euro extends losses and tests levels below 1.1600 amid cautious markets.
- Investors cut back Fed easing hopes, awaiting the release of delayed US macroeconomic data.
- Fresh frictions between China and Japan have crushed risk appetite during the Asian session.
EUR/USD opened the week on a soft note, and returns to the 1.1600 area at the time of writing, extending Friday's reversal from session highs above 1.1650. Markets remain moderately averse to risk on Monday, awaiting a backlog of delayed US economic data, which is underpinning support for the safe-haven US Dollar.
In the US, President Donald Trump stepped back on tariffs on more than 200 products, including coffee, bananas, and orange juice, acknowledging the impact of higher import costs on inflation and following a series of Democratic victories in local elections. The market reaction to the news, however, was marginal.
Later during the day, the European Commission will release the Eurozone Economic Growth Forecasts, which might provide some fundamental guidance to the Euro, ahead of the US New York Empire State Manufacturing Index and the speeches from several officials from the Federal Reserve (Fed) such as Vice Chair Philip Jefferson, New York Fed President John Williams, Minneapolis Fed President Neel Kashkari, and Governor Christopher Waller.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.12% | 0.16% | 0.08% | -0.00% | 0.17% | 0.07% | 0.06% | |
| EUR | -0.12% | 0.03% | -0.04% | -0.12% | 0.05% | -0.04% | -0.06% | |
| GBP | -0.16% | -0.03% | -0.08% | -0.16% | 0.01% | -0.10% | -0.10% | |
| JPY | -0.08% | 0.04% | 0.08% | -0.08% | 0.09% | -0.01% | -0.02% | |
| CAD | 0.00% | 0.12% | 0.16% | 0.08% | 0.18% | 0.06% | 0.06% | |
| AUD | -0.17% | -0.05% | -0.01% | -0.09% | -0.18% | -0.10% | -0.12% | |
| NZD | -0.07% | 0.04% | 0.10% | 0.01% | -0.06% | 0.10% | -0.01% | |
| CHF | -0.06% | 0.06% | 0.10% | 0.02% | -0.06% | 0.12% | 0.00% |
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: A moderate risk-off mood lifts the US Dollar
- The Euro depreciates for the second consecutive day, as investors remain wary of taking risks and await the release of US economic data to better assess the momentum of the economy and the Fed's monetary easing calendar.
- Fed officials highlighted the upside risks of inflation last week, playing down concerns about a sharp deterioration of the labour market. This has prompted traders to push back expectations of a December rate cut to a 43% chance right now, from 60% last week and more than 90% one month ago, according to data by the CME Group's FedWatch tool.
- In Asia, comments by Japanese Prime Minister Sanae Takaichi, warning that a Chinese attack on Taiwan would trigger a military response, have opened a new area of friction in the region and hammered risk appetite, as China has asked its citizens to avoid travelling to Japan.
- The New York Empire State Manufacturing Index, due later during the American session, is expected to show that business conditions in the sector deteriorated somewhat over the last month, with the index retreating to 6.1 in November from the 10.7 reading seen the previous month.
Technical Analysis: EUR/USD failed to break the bearish channel
EUR/USD failed to confirm above the top of the descending channel from early October highs last week and is pulling lower. Bears remain contained above the 1.1600 level so far, but technical indicators show a weakening momentum.
The 4-hour Relative Strength Index (RSI) is testing the key 50 level, and the Moving Average Convergence Divergence (MACD) in the same timeframe has crossed below the signal line, which suggests the possibility of a deeper correction.
Session lows are at the 1.1595-1.1600 area, which is closing the path towards the November 7, 10, and 11 lows in the 1.1535-1.1545 area, ahead of the November 5 lows, near 1.1470. To the upside, trendline resistance is at the 1.1640 area, and the October 28 and 29 highs are around 1.1670. Bulls would need to break above these levels to confirm a trend shift and aim for the October 17 high, near 1.1730.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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