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- EUR/USD oscillates around 200-day SMA amid mixed fundamental cues
EUR/USD oscillates around 200-day SMA amid mixed fundamental cues
- EUR/USD attracts some dip-buying on Monday, though lacks bullish conviction.
- Retreating US bond yields undermines the USD and lends support to the major.
- A looming recession risk in Germany holds back bulls from placing fresh bets.
The EUR/USD pair reverses an intraday dip to the 1.0800 neighbourhood and touches a fresh daily peak during the early European session on Monday. European Central Bank (ECB) officials have been more vocal about the need for more evidence that inflation is returning to the 2% target before lowering borrowing costs. This, along with an improvement in the German Ifo Business Climate, is seen acting as a tailwind for the shared currency and the currency pair amid subdued US Dollar (USD) price action.
That said, concerns about a looming recession in Germany – the Eurozone's largest economy – might hold back bullish traders from placing aggressive bets around the EUR/USD pair. Furthermore, growing acceptance that the Federal Reserve (Fed) will keep rates higher for longer could underpin the Greenback and contribute to capping gains for the major. Investors might also prefer to wait on the sidelines ahead of this week's release of the flash consumer inflation figures from the Eurozone and the US Core PCE Price Index.
Daily digest market movers: Draws support from delayed ECB rate cut bets, subdued USD price action
- European Central Bank policymakers continue to push back against expectations for early interest rate cuts, which lends support to the EUR/USD pair.
- ECB's Robert Holzmann said on Friday that the main risk to rate cuts is the Red Sea tension and that it is better to cut interest rates later than to do so too early.
- Adding to this, ECB's executive board member Isabel Schnabel noted that monetary policy has had a weaker impact on dampening demand for services.
- Furthermore, ECB policymaker and Bundesbank Chief Joachim Nagel said that it is too early to cut interest rates as the price outlook is not yet clear enough.
- Separately, ECB President Christine Lagarde said that bargaining rounds in the first quarter will be key for the upcoming decisions on interest rates.
- Retreating US Treasury bond yields fail to assist the US Dollar to build on last week's recovery from its lowest level since early February and further lends support.
- The FOMC meeting minutes, along with hawkish remarks by several Federal Reserve officials, reaffirmed bets that the US central bank will keep rates higher for longer.
- The Bundesbank, in its latest monthly report, warned that the German economy is likely in recession and might keep a lid on any further upside for the currency pair.
Technical analysis: Bulls need to wait for sustained strength and acceptance above the 200-day SMA
From a technical perspective, last week's sustained move beyond the 23.6% Fibonacci retracement level of the December-February fall was seen as a key trigger for bulls. Moreover, oscillators on the daily chart have just started gaining positive traction and validate the positive outlook. That said, it will still be prudent to wait for a move above the very important 200-day Simple Moving Average (SMA) before positioning for additional gains.
The EUR/USD pair might then aim to surpass the 1.0865 zone or the 38.2% Fibo. level, before aiming to retest the multi-week high touched last Thursday. Some follow-through buying beyond the 1.0900 mark should lift the EUR/USD pair further towards the 50% Fibo. level, around the 1.0965-1.0970 region. The momentum could extend further and allow bulls to reclaim the 1.1000 psychological mark for the first time since January 11.
On the flip side, the 1.0800 mark, or the 23.6% Fibo. level might continue to protect the immediate downside. Any further slide is likely to attract fresh buyers near the 1.0760 horizontal zone. The latter should act as a pivotal point, which if broken will suggest that the recent recovery from a three-month low has run out of steam already and make the EUR/USD pair vulnerable to accelerate the fall towards retesting sub-1.0700 levels.
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 | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.08% | 0.03% | 0.12% | 0.22% | -0.05% | 0.29% | -0.06% | |
| EUR | 0.07% | 0.10% | 0.19% | 0.30% | 0.03% | 0.37% | 0.01% | |
| GBP | -0.02% | -0.10% | 0.10% | 0.20% | -0.07% | 0.27% | -0.08% | |
| CAD | -0.12% | -0.20% | -0.10% | 0.11% | -0.18% | 0.16% | -0.19% | |
| AUD | -0.25% | -0.32% | -0.21% | -0.12% | -0.27% | 0.05% | -0.31% | |
| JPY | 0.05% | -0.03% | 0.13% | 0.17% | 0.31% | 0.32% | -0.02% | |
| NZD | -0.30% | -0.35% | -0.25% | -0.18% | -0.07% | -0.32% | -0.36% | |
| CHF | 0.05% | -0.02% | 0.09% | 0.18% | 0.30% | 0.01% | 0.34% |
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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