EUR/USD appreciates amid risk appetite, weaker US Dollar
- EUR/USD edges higher, reaching session highs beyond 1.1850
- An improved risk sentiment and a weaker US Dollar are boosting the pair on Monday.
- Euro bulls are aiming for the 1.1900 area.
The Euro (EUR) has opened the week on a strong note against the US Dollar (USD), edging higher and trading above 1.1850 at the time of writing on Monday. Positive risk sentiment and rising expectations that the US Federal Reserve (Fed) will cut interest rates further in the coming months are weighing on the US Dollar ahead of a busy economic data week in the US.
The market has welcomed the landslide victory of Prime Minister Sanae Takaichi in Japan, which has soothed concerns amid prospects of a stable government. The immediate reaction has been a Japanese Yen (JPY) recovery, which has increased bearish pressure on the USD.
During the European session, some European Central Bank (ECB) members, including President Christine Lagarde, will take the stage. However, they are unlikely to change the message from last week's monetary policy meeting, pointing to a steady monetary policy.
Later on, speeches from Fed members will likely show the divergence within the central bank's monetary policy committee. Governors Stephen Miran and Christopher Waller are likely to defend lower interest rates, while the Atlanta Fed President Raphael Bostic might show a more cautious stance.
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 | -0.26% | 0.07% | -0.38% | -0.09% | -0.30% | -0.10% | -0.26% | |
| EUR | 0.26% | 0.33% | -0.13% | 0.16% | -0.04% | 0.17% | -0.01% | |
| GBP | -0.07% | -0.33% | -0.45% | -0.18% | -0.37% | -0.16% | -0.33% | |
| JPY | 0.38% | 0.13% | 0.45% | 0.26% | 0.06% | 0.26% | 0.08% | |
| CAD | 0.09% | -0.16% | 0.18% | -0.26% | -0.21% | 0.00% | -0.17% | |
| AUD | 0.30% | 0.04% | 0.37% | -0.06% | 0.21% | 0.21% | 0.04% | |
| NZD | 0.10% | -0.17% | 0.16% | -0.26% | -0.00% | -0.21% | -0.17% | |
| CHF | 0.26% | 0.00% | 0.33% | -0.08% | 0.17% | -0.04% | 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: Rising Fed cuts hopes are weighing on the US Dollar
- The US Dollar has opened the week on the back foot, as weak employment figures last week have boosted investors' expectations that the Fed will be forced to lower borrowing costs further in order to support employment creation.
- The odds of a Fed interest rate cut in March have risen above 17% from 10% last week, while markets are pricing in nearly a 70% chance of monetary easing in June – the first meeting after Chairman Jerome Powell's term ends – according to data from the CME Group's Fed Watch Tool.
- The highlight of Monday's Asian session has been the strong victory of Sanae Takaichi's Liberal Democratic Party (LDP) in Japan's Elections. The LDP and its coalition partner have obtained 352 of the 465 seats in the Lower House, which paves the path for her fiscal-expansionist agenda. Traders have scaled back Yen short positions as the immediate reaction to the news, which has sent the US lower.
- The US Dollar struggled to hold gains last week, as a string of downbeat employment reports brought concerns about the labor market back to the table.
- On Friday, the preliminary data showed that the Michigan Consumer Sentiment Index rose for the third consecutive month in February, against expectations, but it failed to improve investors' sentiment towards the US Dollar.
- Later this week, the market will be attentive to key US economic releases, including the delayed February Nonfarm Payrolls (NFP) report, which is due on Wednesday. US Retail Sales, due on Tuesday, and the Consumer Price Index (CPI) report on Friday will also be analysed in detail
Technical Analysis: EUR/USD bulls take control, aiming for the 1.1900 area
EUR/USD correction has found support at the 61.8% Fibonacci retracement level from the late-January upswing, and the pair is trending higher again, with technical indicators in 4-hour chart underscoring the bullish momentum. The Moving Average Convergence Divergence (MACD) histogram turns positive and widens, and the Relative Strength Index (RSI) has climbed above 60, reinforcing the positive tone.
Bulls are aiming for the area between February 1 and 2 highs, near 1.1875, and the previous support zone around 1.1895, which capped bears on January 28 and 30. Further up, 1.1954 comes into focus.
Intraday support is at 1.1815, ahead of the key 1.1765 level (Friday's low)
(The technical analysis of this story was written with the help of an AI tool.)
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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