EUR/USD retreats as investors digest mixed US employment figures
- The Euro pulls back from 1.1800 highs against the US Dollar and nears 1.1700.
- US labour data keeps hopes of further Fed monetary easing alive.
- EUR/USD is correcting lower as the focus shifts to the ECB's monetary policy.
EUR/USD is pulling back from nearly three-month highs above 1.1800, trading at 1.1710 at the time of writing, as the US Dollar (USD) regains lost ground. The Greenback fell after the release of a backlog of delayed US labour figures on Tuesday, but is picking up on Wednesday, with investors pondering the Federal Reserve's (Fed) next monetary policy steps.
Data released by the US Bureau of Labor Statistics revealed that employment fell sharply in October before increasing more than expected in November, while the Unemployment Rate in November increased to a four-year high, and wage growth moderated.
These figures should be taken with caution, as the US government shutdown might have distorted the data. However, the big picture continues to show a stalled labor market, which maintains investors' hopes of a March interest rate cut by the Fed intact, as shown by the CME Group Fedwatch tool.
In the economic calendar on Wednesday, the final reading of the Eurozone's Harmonized Index of Consumer Prices is unlikely to trigger any significant volatility, as markets await the outcome of the European Central Bank's monetary policy meeting and US consumer Inflation figures, both due on Thursday.
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 | 0.33% | 0.59% | 0.39% | 0.17% | 0.27% | 0.30% | 0.32% | |
| EUR | -0.33% | 0.28% | 0.07% | -0.13% | -0.07% | -0.03% | -0.01% | |
| GBP | -0.59% | -0.28% | -0.21% | -0.42% | -0.32% | -0.31% | -0.27% | |
| JPY | -0.39% | -0.07% | 0.21% | -0.22% | -0.12% | -0.09% | -0.07% | |
| CAD | -0.17% | 0.13% | 0.42% | 0.22% | 0.10% | 0.12% | 0.15% | |
| AUD | -0.27% | 0.07% | 0.32% | 0.12% | -0.10% | 0.03% | 0.05% | |
| NZD | -0.30% | 0.03% | 0.31% | 0.09% | -0.12% | -0.03% | 0.02% | |
| CHF | -0.32% | 0.01% | 0.27% | 0.07% | -0.15% | -0.05% | -0.02% |
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 corrects lower ahead of the ECB meeting
- The Euro (EUR) is correcting lower with investors awaiting the conclusion of the ECB's monetary policy meeting due on Thursday. The bank is widely expected to keep interest rates on hold, and investors will be looking for confirmation that the monetary easing cycle has come to an end.
- In the US on Tuesday, delayed Nonfarm Payrolls data showed a 105,000 net decline in employment in October and a 64,000 increase in November, this last beating expectations of a 50K increment. The Unemployment Rate, on the other hand, increased to 4.6%, from 4.4% in September, and wage growth moderated to a 3.5% year-on-year rate in November from 3.7% in October.
- Also on Tuesday, data from the US Commerce Department revealed that Retail Sales stalled in October, following a 0.1% increase in September, and against market expectations of another 0.1% rise. Excluding automobiles, sales of all other products rose 0.4% MoM.
- In the Eurozone, preliminary business activity data disappointed. The preliminary HCOB Manufacturing PMI eased to 49.2 in December from 49.6 in the previous month, and Services activity slowed down to 52.6 from 53.6 in November.
- On Wednesday's economic calendar, the Eurozone's HICP is expected to confirm the preliminary figures showing that inflation contracted 0.3% in November and accelerated to a 2.2% year-on-year pace, from 2.1% in October.
- In the US, the focus will be on the speeches from Fed Governor Christopher Waller, New York Fed President John Williams, and Atlanta Fed President Raphael Bostic, which might give further hints about the central bank's monetary policy plans.
Technical Analysis: EUR/USD bears focus on 1.1685
The EUR/USD pair has been rejected at the 1.1800 and is going through a bearish correction, with sellers targeting the 1.1685 area, where the December 11 low meets the trendline support from November 20 lows.
The 4-hour Relative Strength Index (RSI) has dropped below the 50 level, and the Moving Average Convergence Divergence (MACD) indicator has turned sharply lower after crossing below the signal line, which highlights a growing negative momentum.
The mentioned 1.1685 level is a key support to maintain the broader bullish trend intact. A confirmation below here would clear the path towards the December 9 low, at 1.1615, ahead of the December 1 and 2 lows, near 1.1590.
To the upside, the pair should return above the broken support around 1.1720 (December 12 low) to shift the focus towards Tuesday's high, near 1.1800, and the September 23 and 24 highs, near 1.1820.
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.
추천 기사
