EUR/USD hovers near weekly lows in risk-averse markets
- The Euro remains trading sideways below 1.1600, with 1.1570 holding bears for now.
- A risk-averse sentiment is underpinning the safe-haven US Dollar.
- The Euro failed to draw support from the weak US labour data released on Tuesday.
EUR/USD shows marginal gains, trading at 1.1590 at the time of writing on Wednesday after bouncing from the previous day's lows at 1.1570. Still, the pair remains trapped within previous ranges, with the 1.1600 level capping bulls. The risk-averse sentiment, as global equity markets are selling off, is limiting the US Dollar's (USD) downside attempts.
US economic data, however, has not been particularly supportive for the Greenback. US Initial Jobless Claims grew beyond expectations in the week of October 18, and the US ADP Employment Change weekly report showed that businesses shed an average of 2,500 jobs per week in the four weeks ending on November 1. All in all, figures reflect a weakening labour market.
Bets of a Federal Reserve (Fed) interest rate cut in December have inched higher, but the Richmond Fed President, Thomas Barkin, affirmed on Tuesday that committee members might need more data to decide on rates.
In the Eurozone, on Wednesday, the focus is on the final release of October's Harmonized Index of Consumer Prices (HICP), while in the US, all eyes will be on the minutes of the October Fed meeting, which are due to be released at 19:00 GMT.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | 0.05% | -0.03% | 0.12% | 0.32% | 0.43% | 0.00% | |
| EUR | 0.04% | 0.09% | 0.00% | 0.16% | 0.36% | 0.50% | 0.05% | |
| GBP | -0.05% | -0.09% | -0.08% | 0.07% | 0.27% | 0.40% | -0.04% | |
| JPY | 0.03% | 0.00% | 0.08% | 0.15% | 0.36% | 0.46% | 0.04% | |
| CAD | -0.12% | -0.16% | -0.07% | -0.15% | 0.20% | 0.31% | -0.11% | |
| AUD | -0.32% | -0.36% | -0.27% | -0.36% | -0.20% | 0.11% | -0.31% | |
| NZD | -0.43% | -0.50% | -0.40% | -0.46% | -0.31% | -0.11% | -0.43% | |
| CHF | -0.01% | -0.05% | 0.04% | -0.04% | 0.11% | 0.31% | 0.43% |
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: The Euro remains vulnerable in risk-off markets
- The Euro keeps trading sideways, showing a lack of clear bias near weekly lows, as the sour market mood underpins the safe-haven US Dollar. The sell-off on global equity markets has triggered a rush for safety, which is keeping risk-sensitive assets like the EUR on the back foot.
- In the US, Initial Jobless Claims rose to 232,000 and Continuing Claims rose to 1,957 million, both for the week ending in October 18, and from 219,000 and 1,926 million respectively in the week of September 19 – this was the last week figures were released ahead of the US government shutdown.
- US ADP employment data revealed that businesses shed an average of 2,500 jobs per week in the four weeks ending on November 1. This is a better figure than the 11,250 average posted the previous week, but still reflects a weakening labour market and adds pressure on the Fed to cut interest rates further at upcoming meetings.
- On the positive side, US Factory Orders delayed data revealed a 1.4% increase in August, in line with market consensus, to offset the 1.3% decline seen in the previous month. The impact of this figure on the US Dollar, however, was minimal.
- On Wednesday, the Eurozone HICP is expected to confirm that inflation accelerated to 0.2% in October from 0.1% in September and that, year-on-year, consumer prices eased to 2.1% from 2.2% in September. The Core HICP is seen growing at a 0.3% pace in October and 2.4% yearly.
- During the US session, the minutes of the last Fed meeting are likely to provide further insight into the central bank's monetary policy, although the highlight this week will be the release of September's delayed Nonfarm Payrolls report, due on Thursday.
Technical Analysis: EUR/USD remains under pressure below 1.1600
There are no relevant changes in the EUR/USD technical picture. The pair remains trading sideways below 1.1600 with the bearish trend from 1.1650 in play. The mild recovery attempt from weekly lows near 1.1570 seems fragile, and technical indicators remain within negative territory.
The 4-hour Relative Strength Index (RSI) momentum indicator is below the 50 level, and the Moving Average Convergence Divergence (MACD) keeps posting red histogram bars. However, the MACD line is turning flat, suggesting a weaker bearish momentum.
Tuesday's low near 1.1570 is still at a short distance and below there, the November 7, 10, and 11 lows in the 1.1535-1.1545 area, and the November 5 lows, near 1.1470, emerge as the next bearish targets. To the upside, Tuesday's high, around 1.1610, is likely to challenge bulls ahead of the top of the bearish channel, which now lies around 1.1635. Further up, the October 28 and 29 highs, near 1.1670, would come into focus.
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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