By Areena Fx- The Euro finds some support at 1.1600, but upside attempts remain frail.
- Trump refuses to meet Democratic policymakers, and the US government shutdown continues with no end in sight.
- The US Dollar rally loses momentum as the focus shifts to the prospects of Fed interest rate cuts.
EUR/USD posts marginal gains on Wednesday, to snap a three-day losing streak, and trades near 1.1610 after hitting one-week lows right below 1.1600 earlier on the day. The US Dollar (USD) has lost some of its recent shine, as the Gold sell-off halts and the US government shutdown continues without prospects of an immediate solution.
On Tuesday, US President Donald Trump rebuffed meeting requests by Democratic lawmakers from the previous day, saying that he will not meet them until the government reopens. Meanwhile, the shutdown enters its fourth week as the Senate failed to pass a funding resolution for the 11th time on Monday.
In the absence of key macroeconomic releases in the Eurozone and the US, the speeches of European Central Bank (ECB) policymakers, including President Christine Lagarde and Vice President Luis de Guindos, and Federal Reserve (Fed) officials will be the unique distraction for traders. These speeches, however, are unlikely to provide any new clues on the central banks’ near-term monetary policies.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.05% | 0.24% | 0.00% | -0.18% | -0.27% | -0.24% | -0.08% | |
| EUR | 0.05% | 0.28% | 0.07% | -0.13% | -0.23% | -0.18% | -0.03% | |
| GBP | -0.24% | -0.28% | -0.22% | -0.42% | -0.51% | -0.46% | -0.31% | |
| JPY | 0.00% | -0.07% | 0.22% | -0.18% | -0.26% | -0.22% | -0.06% | |
| CAD | 0.18% | 0.13% | 0.42% | 0.18% | -0.10% | -0.05% | 0.10% | |
| AUD | 0.27% | 0.23% | 0.51% | 0.26% | 0.10% | 0.05% | 0.19% | |
| NZD | 0.24% | 0.18% | 0.46% | 0.22% | 0.05% | -0.05% | 0.15% | |
| CHF | 0.08% | 0.03% | 0.31% | 0.06% | -0.10% | -0.19% | -0.15% |
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 US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: Fed monetary easing hopes weigh on the USD
- The US Dollar lost momentum as the latest episode of the Sino-US trade war went into the back burner, and investors shifted their focus once again to the protracted US government shutdown and the prospects of a series of interest rate cuts by the Federal Reserve.
- A survey by Reuters showed on Tuesday that most analysts expect the Fed to cut rates by 25 basis points at the October 28-29 meeting and a further quarter-point in December. 25 of 33 economists show concerns that the central bank might go too far with monetary easing and set a very low terminal rate by the end of next year.
- US President Trump affirmed on Tuesday, that Republicans “will not be extorted” by Democrats to bend to their demands, which suggests that this government closure is likely to be one of the largest in history. Such an extended closure will likely take a toll on US GDP growth and undermine investors’ confidence in the US Dollar.
- Earlier this week, Trump announced that he will meet Chinese President Xi Jinping in South Korea next week and that he expects to reach a fair deal. These comments have ditched fears of a US-China trade war, at least for now, and triggered a sharp sell-off in precious metals.
Technical Analysis: EUR/USD finds support at the 1.1600 level
EUR/USD has found support at the 1.1600 level, but the broader trend remains bearish, following the rejection at 1.1730 last week. Technical indicators are in negative territory. The 4-hour Relative Strength Index is below 40.00, which highlights the fragility of the pair’s recovery attempt.
Upside attempts remain subdued, well below Tuesday’s highs, in the area of 1.1650. The pair should break above that level to shift the focus to the October 17 high, at 1.1728. Further up, the October 1 high, around 1.1775, comes into focus.
On the other hand, a confirmation below the intra-day low of 1.1598 would expose the October 9 and 14 lows in the area of 1.1545 ahead of the channel bottom, now around 1.1460.
Euro FAQs
What is the Euro?
The Euro is the currency for the 19 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.