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- EUR/USD trims intraday losses after Eurozone Economic Sentiment, trades near to 1.0770
EUR/USD trims intraday losses after Eurozone Economic Sentiment, trades near to 1.0770
- EUR/USD declines as the US Dollar improves on market caution ahead of US Inflation.
- The Euro receives a challenge from expectations of an ECB interest rate cut at the start of the second quarter.
- US CPI is expected to moderate at the reading of 2.9% YoY, down from 3.4% prior.
The EUR/USD pair continues its downtrend for the second consecutive day as the US Dollar (USD) gains strength, as traders exercise caution ahead of the release of inflation data from the United States (US) scheduled for Tuesday. Additionally, Economic Sentiment data from the Eurozone and Germany has been released, and given the EUR/USD pair a small boost in the immediate reaction to the data.
The Euro faces resistance as speculation mounts regarding potential interest rate cuts by the European Central Bank (ECB) at the start of the second quarter. Comments from ECB Executive Board member Piero Cipollone indicated that there may not be a need for the ECB to further restrict demand in its efforts to address inflation, suggesting that interest rates might not need to be raised further.
The US Dollar Index (DXY), tracking the USD against a basket of six major currencies, maintains its upward trajectory for the second successive session. Expectations of inflationary pressures in the United States are driving speculation that the Federal Reserve (Fed) will refrain from cutting interest rates at the upcoming March meeting. This sentiment is bolstering the attractiveness of the US Dollar relative to the Euro.
Daily digest market movers: EUR/USD extends its losses as US Dollar improves
- The US Dollar Index hovers around 104.20 with the 2-year and 10-year US Treasury yields at 4.47% and 4.17%, respectively, by the press time.
- Traders are pricing in a mere 14% probability of a rate cut by the Federal Reserve (Fed) in March. However, the likelihood of a rate cut at the May meeting is estimated to be around 60%.
- Dallas Federal Reserve (Fed) Bank President Lorie K. Logan stated that there is currently no immediate necessity to reduce interest rates. She recognized "tremendous progress" in controlling inflation but stressed the importance of obtaining additional evidence to ensure the sustainability of this progress.
- The US Monthly Budget Statement for January showed a deficit of $22 billion, slightly higher than the expected deficit of $21 billion and the previous deficit of $129 billion.
- 3-month and 6-month US Treasury bills were auctioned at rates of 5.23% and 5.065%, respectively.
- The Euro rallies a little after Eurozone and German Economic Sentiment data from ZEW come in above expectations at 25 vs. 20.1 forecast, and 19.9 vs. 17.5 expected, respectively.
- German Current Situation ZEW sentiment, however, dips below expectations, coming in at -81.7 versus -79 forecast.
Technical Analysis: EUR/USD hovers above the major support of 1.0750
EUR/USD trades near 1.0770 on Tuesday, close to the immediate support at the major level of 1.0750. A break below this level could put downward pressure on the EUR/USD pair to revisit the previous week’s low at 1.0722 followed by the psychological support of 1.0700 level.
On the upside, the EUR/USD pair could find an immediate barrier at the 21-4hr Exponential Moving Average (EMA) at 1.0773 before the psychological resistance of 1.0800. A breakthrough above this level could inspire the bulls of the pair to test the 23.6% Fibonacci retracement level at 1.0821 followed by the major support at 1.0850.
EUR/USD: Four-Hour Chart
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Pound Sterling.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.02% | -0.31% | -0.06% | 0.16% | 0.07% | 0.37% | 0.40% | |
| EUR | 0.02% | -0.30% | -0.04% | 0.17% | 0.09% | 0.37% | 0.41% | |
| GBP | 0.33% | 0.31% | 0.27% | 0.48% | 0.40% | 0.68% | 0.71% | |
| CAD | 0.05% | 0.04% | -0.26% | 0.19% | 0.13% | 0.41% | 0.45% | |
| AUD | -0.16% | -0.17% | -0.48% | -0.21% | -0.09% | 0.21% | 0.27% | |
| JPY | -0.07% | -0.08% | -0.39% | -0.12% | 0.09% | 0.29% | 0.33% | |
| NZD | -0.37% | -0.38% | -0.68% | -0.42% | -0.21% | -0.29% | 0.03% | |
| CHF | -0.39% | -0.41% | -0.72% | -0.44% | -0.26% | -0.32% | -0.03% |
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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
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.
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