- Analytics
- News and Tools
- Market News
- Euro looks weaker and breaks below 1.0900 ahead of Powell, key data
Euro looks weaker and breaks below 1.0900 ahead of Powell, key data
- Euro extends the weekly downtick to multi-day lows.
- Stocks in Europe closed Wednesday’s session in a firm note.
- EUR/USD drops below the 1.0900 barrier on extra USD gains.
- Flash inflation figures in Germany are due later in the session.
- Chief Powell meets Bank of Spain’s Hernandez de Cos.
Further selling pressure hurts the Euro (EUR) and forces EUR/USD to break below the key support at 1.0900 the figure ahead of the opening bell in the euro area on Thursday.
Indeed, the pair gives away further ground on the back of the prevailing risk-off scenario and the persistent move higher in the greenback, which motivates the USD Index (DXY) to advance to 2-week highs further north of the 103.00 hurdle on Thursday.
In the meantime, extra gains in the US Dollar underpin the continuation of the corrective decline in EUR/USD, which seems to have met some initial support in the 1.0880 region for the time being, an area also coincident with the transitory 55-day SMA.
The renewed weakness in the risk complex comes after central bank chiefs expressed hawkish sentiments at the ECB's symposium in Portugal on Wednesday, highlighting that current policy measures are still not adequately restrictive. Despite this, the market appears to be at ease with the belief that the Federal Reserve will implement two additional interest rate hikes, potentially back-to-back, signaling the nearing conclusion of the tightening cycle.
Likewise, although the ECB holds a hawkish stance and plans to raise rates in July, and potentially once more thereafter, concerns arise due to the economic decline and credit data, which restrict expectations regarding the extent and duration of the ECB's policy rate increases.
The potential future actions of the Fed and the ECB in normalizing their monetary policies remain a topic of ongoing debate. This discussion takes place against the backdrop of increasing speculation about an economic slowdown on both sides of the Atlantic.
It will be a busy day in terms of data releases, as advanced inflation figures are due in Spain and Germany, as well as the Economic Sentiment and the final print of the Consumer Confidence in the broader euro area.
In the US, the final prints of the Q1 Growth Rate will be in the limelight seconded by usual Initial Jobless Claims, Pending Home Sales and the speech by Atlanta Fed Raphael Bostic (2024 voter, hawk).
Daily digest market movers: Euro appears offered below 1.0900
- The EUR remains under pressure on USD-buying.
- Germany’s flash CPI for the month of June takes centre stage.
- The European Council meets in Brussels later in the morning.
- Fed’s Powell will participate in an event at the Bank of Spain.
- The Dollar looks bid following Wednesday’s event at the ECB Forum.
- ECB’s Mario Centeno (dove) suggested a pause should be close.
Technical Analysis: Euro challenges the 55-day SMA
EUR/USD remains under pressure and puts the provisional 55-day SMA at 1.0880 to the test on Thursday. The loss of this level exposes a deeper pullback to the June low at 1.0844 (June 23) ahead of the provisional 100-day SMA at 1.0815. South from here emerges the May low of 1.0635 (May 31) prior to the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6).
If bulls regains the upper hand, the next hurdle is then expected at the June peak of 1.1012 (June 22) prior to the 2023 high of 1.1095 (April 26), which is closely followed by the round level of 1.1100. North from here emerges the weekly top of 1.1184 (March 31, 2022), which is supported by the 200-week SMA at 1.1181, just before another round level at 1.1200.
The constructive view of EUR/USD appears unchanged as long as the pair trades above the crucial 200-day SMA, today at 1.0583.
Euro FAQs
What is the Euro?
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%).
What is the ECB and how does it impact the Euro?
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.
How does inflation data impact the value of the Euro?
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.
How does economic data influence the value of the Euro?
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.
How does the Trade Balance impact the Euro?
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.
© 2000-2024. All rights reserved.
This site is managed by Teletrade D.J. LLC 2351 LLC 2022 (Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines).
The information on this website is for informational purposes only and does not constitute any investment advice.
The company does not serve or provide services to customers who are residents of the US, Canada, Iran, The Democratic People's Republic of Korea, Yemen and FATF blacklisted countries.
Making transactions on financial markets with marginal financial instruments opens up wide possibilities and allows investors who are willing to take risks to earn high profits, carrying a potentially high risk of losses at the same time. Therefore you should responsibly approach the issue of choosing the appropriate investment strategy, taking the available resources into account, before starting trading.
Use of the information: full or partial use of materials from this website must always be referenced to TeleTrade as the source of information. Use of the materials on the Internet must be accompanied by a hyperlink to teletrade.org. Automatic import of materials and information from this website is prohibited.
Please contact our PR department if you have any questions or need assistance at pr@teletrade.global.
Bank transfers
