- Analytics
- News and Tools
- Market News
- Euro attempts a rebound beyond 1.0700 amidst Dollar weakness
Euro attempts a rebound beyond 1.0700 amidst Dollar weakness
- The Euro bounces off lows in the sub-1.0700 area vs. the US Dollar.
- Stocks in Europe open Friday’s session with broad-based advances.
- EUR/USD meets initial contention around 1.0685 so far.
- The USD Index (DXY) sheds some ground following multi-month tops.
- Final CPI in Germany matched the preliminary readings in August.
- Wholesale Inventories, Consumer Credit Change come next in the US docket.
The Euro (EUR) manages to gather some upside traction vs. the US Dollar (USD) at the end of the week, lifting EUR/USD back above 1.0700 the figure at the end of the week.
In the meantime, the Greenback partially retreats from Thursday’s six-month tops north of the 105.00 hurdle when gauged by the USD Index (DXY) amidst some tepid recovery in the appetite for the risk complex.
Back to the monetary policy front, speculation over a potential hike by the Federal Reserve (Fed) in November appears to have lost some momentum as of late, while market participants continue to price in rate cuts at some point in Q2 2024.
Regarding the European Central Bank (ECB), market chatter appears to favour a pause at the September 14 meeting, amidst a so far pretty divided Council.
In the euro docket, final inflation figures in Germany saw the CPI rise at a monthly 0.3% in August and 6.1% over the last twelve months, while Industrial Production in France expanded by 0.8% MoM in July.
Across the pond, Wholesale Inventories and Consumer Credit Change are also due.
Daily digest market movers: Euro regains the smile near 1.0700
- The EUR shows some signs of life vs. the USD.
- US yields appear tilted to the downside early on Friday.
- Investors see the ECB keeping the deposit rate unchanged this month.
- Dallas Fed Lorie Logan favours a pause in September.
- NY Fed John Williams expect unemployment to increase past 4%.
- Markets continue to price in Fed rate cuts in Q2 2024.
- Strikes at Chevron LNG plants kick in today.
- Final GDP Growth Rate in Japan came in at 4.8% YoY.
Technical Analysis: Euro keeps favouring a deeper retracement
EUR/USD is trading with modest gains in the vicinity of the 1.0700 area after hitting multi-week lows near 1.0680 in the previous session.
Should the EUR/USD manage to breach the September low at 1.0685 (September 7), it may retest the May low of 1.0635 (May 31) before potentially reaching the March low of 1.0516 (March 15). A breakdown of the latter level could trigger a possible test of the 2023 low at 1.0481 (from January 6).
Conversely, in terms of upward movement, the current focus is on targeting the critical 200-day SMA at 1.0822. Beyond that, bullish momentum may lead to a challenge of the weekly peak at 1.0945 (August 30), which is further bolstered by the provisional 55-day SMA at 1.0945. Subsequently, this could set the stage for a move towards the psychological level of 1.1000 and the August high at 1.1064 (August 10). If the pair manages to clear this area, it might alleviate some of the bearish pressure and potentially aim for the weekly peak at 1.1149 (July 27) ahead of the 2023 top at 1.1275 (July 18).
It's important to note that as long as the EUR/USD remains below the 200-day SMA, a sustained decline in the pair is probable.
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
