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- EUR/USD hits fresh weekly low around 1.0800 on broad-based USD strength
EUR/USD hits fresh weekly low around 1.0800 on broad-based USD strength
- EUR/USD drifts lower for the second straight day amid resurgent USD demand.
- Hawkish Fed expectations and the cautious mood boost the safe-haven buck.
- Reduced bets for more aggressive ECB rate cuts could limit any further losses.
The EUR/USD pair extends the previous day's modest pullback from the 1.0865 region and remains under some selling pressure for the second successive day on Wednesday. The downward trajectory drags spot prices closer to a fresh weekly low, around the 1.0800 mark during the early European session, driven by a pickup in the US Dollar (USD) demand. Against the backdrop of the Federal Reserve's (Fed) higher-for-longer interest rates narrative, the market nervousness ahead of the crucial US Personal Consumption Expenditure (PCE) Price Index on Thursday appears to be benefiting the safe-haven buck.
Investors this week will also confront a slew of inflation reports from Germany, France and Spain on Thursday, followed by the flash Eurozone CPI print on Friday. In the meantime, the flight to safety triggers a fresh leg down in the US Treasury bond yields and might hold back the USD bulls from placing aggressive bets. Moreover, European Central Bank (ECB) officials have been pushing back against market expectations for a rapid monetary policy easing. This could support the shared currency and limit any meaningful depreciating move for the EUR/USD pair.
Daily digest market movers: Bulls remain on the sidelines despite delayed ECB rate cut bets
- The Federal Reserve's hawkish outlook on interest rates, along with the cautious market mood, boosts the safe-haven US Dollar and drags the EUR/USD pair lower for the second successive day on Wednesday.
- Fed Governor Michelle Bowman said on Tuesday that she was in no rush to cut interest rates and that the slower-than-expected progress on inflation has left policymakers cautious about monetary policy stance. This reaffirms bets that the US central bank will wait until June before cutting rates and tempers investors' appetite for riskier assets ahead of the US Personal Consumption Expenditure Price Index on Thursday.
- Meanwhile, the looming US government shutdown and Tuesday's disappointing release of US Durable Goods Orders do little to influence the USD uptick, though retreating US Treasury bond yields might cap gains.
- US President Joe Biden urged Congress leaders to move quickly and emphasized the necessity of finding a solution to avert a detrimental government shutdown as a legislative logjam showed no signs of abating.
- The US Census Bureau reported that orders for long-lasting US manufactured goods registered a steep fall of 6.1% in January, the most in nearly four years and worse than the 4.5% decline anticipated.
- Separately, the Conference Board's Consumer Sentiment Index fell to 106.7 for February after three straight months of gains amid anxiety over potential recession, despite declining inflation expectations.
- Furthermore, the Richmond Fed's Manufacturing Index recorded the fourth successive month of a negative reading, though it improved to -5 in February as compared to -15 in the previous month.
- Traders have scaled back their bets for a rapid reduction in borrowing costs by the European Central Bank and now expect less than 100 bps of rate cuts this year, down from around 150 bps at the start of February.
- The market focus remains on the country-level consumer inflation data from Germany, France and Spain, to be published on Thursday. These data will be followed by the Eurozone region-wide flash CPI print on Friday.
Technical analysis: Mixed setup warrants some caution before placing aggressive bearish bets
From a technical perspective, the recent failure ahead of the 1.0900 mark and the subsequent slide below the 200-day Simple Moving Average (SMA) could be seen as a fresh trigger for bearish traders. That said, oscillators on the daily chart are yet to confirm the negative outlook and warrant some caution before positioning for any further losses. Hence, any further downfall is more likely to find decent support near the 1.0785 horizontal zone. The said area should act as a key pivotal point, which if broken decisively could make the EUR/USD pair vulnerable to accelerate the fall back towards retesting sub-1.0700 levels, or a three-month low touched on February 14.
On the flip side, the 1.0850 region seems to act as an immediate resistance, above which the EUR/USD pair could make a fresh attempt to conquer the 1.0900 round figure. Some follow-through buying should pave the way for a further near-term appreciating move towards reclaiming the 1.1000 psychological mark for the first time since January 11.
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.32% | 0.37% | 0.32% | 0.68% | 0.19% | 1.06% | 0.21% | |
| EUR | -0.29% | 0.08% | 0.01% | 0.39% | -0.13% | 0.77% | -0.10% | |
| GBP | -0.37% | -0.07% | -0.06% | 0.30% | -0.19% | 0.69% | -0.19% | |
| CAD | -0.32% | -0.04% | 0.06% | 0.36% | -0.13% | 0.75% | -0.09% | |
| AUD | -0.70% | -0.39% | -0.32% | -0.38% | -0.51% | 0.38% | -0.48% | |
| JPY | -0.19% | 0.10% | 0.17% | 0.12% | 0.52% | 0.87% | 0.02% | |
| NZD | -1.08% | -0.77% | -0.69% | -0.76% | -0.39% | -0.89% | -0.86% | |
| CHF | -0.21% | 0.11% | 0.16% | 0.10% | 0.49% | -0.02% | 0.85% |
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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