EUR/USD ticks higher as US Dollar languishes awaiting delayed data
- The Euro maintains a moderate bid tone against the US Dollar and consolidates near 1.1650.
- Hawkish comments by Fed officials have failed to support a weak Greenback.
- Eurozone GDP data is expected to confirm that the economy grew at a 0.2% pace in Q3.
EUR/USD extends gains for the eighth consecutive day on Friday, trading at 1.1640 at the time of writing on Friday, on track for a 0.6% rally this week. The pair has drawn support from a weaker US Dollar, with investors anticipating a raft of weak economic data next week, as US authorities will release the macroeconomic figures delayed due to the government shutdown.
Federal Reserve (Fed) policymakers, however, showed reluctance to ease monetary policy further on Thursday. St. Louis Fed President Alberto Mussalem and Cleveland Fed President Beth Hammack were more concerned about the risks of inflation than about the labour market's momentum, while Minneapolis Fed President Neel Kashkari delivered a more neutral message.
The US Dollar's weakness offset the negative impact of a disappointing Eurozone Industrial Production report. This Friday, the focus shifts to the second reading of the Q3 Eurozone Gross Domestic Product, while in the US, more speeches from Fed officials will provide the fundamental guidance for the Greenback.
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 | -0.06% | 0.26% | 0.03% | 0.02% | 0.00% | -0.41% | -0.17% | |
| EUR | 0.06% | 0.32% | 0.09% | 0.08% | 0.06% | -0.36% | -0.11% | |
| GBP | -0.26% | -0.32% | -0.24% | -0.24% | -0.26% | -0.68% | -0.43% | |
| JPY | -0.03% | -0.09% | 0.24% | 0.03% | -0.01% | -0.43% | -0.17% | |
| CAD | -0.02% | -0.08% | 0.24% | -0.03% | -0.03% | -0.43% | -0.18% | |
| AUD | -0.00% | -0.06% | 0.26% | 0.00% | 0.03% | -0.42% | -0.17% | |
| NZD | 0.41% | 0.36% | 0.68% | 0.43% | 0.43% | 0.42% | 0.25% | |
| CHF | 0.17% | 0.11% | 0.43% | 0.17% | 0.18% | 0.17% | -0.25% |
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 remains buoyed on US Dollar weakness
- The Euro is going through a two-week rally, supported by US Dollar weakness rather than positive Eurozone data. Investors have been cautious about placing large US Dollar longs amid the economic data blackout, and so far, unfazed by the hawkish comments from Fed officials. The release of a backlog of delayed figures next week will clarify the picture of the US economy and is expected to set the US Dollar's direction.
- On Thursday, Fed's Hammack said that monetary policy is currently barely restrictive, and that interest rates need to be at levels that help to reduce inflation, suggesting that she will be against an interest rate cut in December.
- St. Louis Fed President Alberto Mussalem showed a similar view, pointing to inflation as the central bank's main concern and affirming that the Fed has "limited room to ease without becoming overly accommodative".
- Also on Thursday, Fed's Kashkari pointed to a resilient US economy in an interview at Bloomberg and urged caution with further monetary easing. Regarding December's meeting, Kashkari said that he is still undecided but that he does not have a strong inclination for an interest rate cut.
- In Europe, the Eurozone's Industrial Production figures showed a 0.2% growth in September, following an upwardly revised 1.1% decline in August. Year-on-year, factory activity remained expanding at a steady 1.2% pace, figures well below market expectations of a 0.7% monthly growth and a 2.1% yearly improvement.
- On Friday, the Eurozone GDP is expected to confirm the preliminary data, revealing a 0.2% quarterly expansion and a 1.3% economic growth in the last 12 months.
Technical Analysis: EUR/USD remains above the channel, with 1.1670 on sight
EUR/USD broke the top of a descending channel from early October highs and is consolidating gains on Friday. Technical indicators are positive, but the 4-hour Relative Strength Index (RSI) is nearing overbought conditions after rallying continuously for the last eight days. The Moving Average Convergence Divergence (MACD) in the same timeframe seems likely to cross below the signal line. All in all, signals hinting at some consolidation might be ahead.
Bulls should remain above the channel top, currently around 1.1610, to confirm a trend shift, and keep the October 28 and 29 highs, near 1.1670, in focus. Further up, the target is the October 17 high, near 1.1730. A correction below the mentioned trendline, at 1.1610, on the other hand, is likely to seek support at the November 12 low, in the vicinity of 1.1575, ahead of the 1.1530-1.1540 area (near November 7 and 10 lows).
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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