The EUR/USD pair experiences a continued decline for the second consecutive day, reaching near 1.0790 during the European session on Thursday. The rise in the US Dollar (USD) comes after Federal Reserve (Fed) Chair Jerome Powell dismissed the possibility of a rate cut in the upcoming March meeting, boosting USD and supporting US Treasury yields.

The Euro faces challenges due to lower-than-expected preliminary Consumer Price Index (CPI) data from Germany released on Wednesday. This has led to heightened expectations of a potential interest rate cut by the European Central Bank (ECB) in June. Despite this, ECB Vice President Luis de Guindos suggested earlier in the week that rate cuts would be considered only when there is confidence that inflation aligns with the central bank’s 2% goal.

German CPI for January showed a year-on-year increase of 2.9%, below the expected 3.3% and December’s 3.7%. While monthly consumer inflation met expectations, rising to 0.2% from the previous 0.1%, the Harmonized Index of Consumer Prices YoY increased by 3.1%, lower than the prior figure of 3.8%. The Eurozone’s complete inflation report is scheduled for release at 10:00 GMT.

The US Dollar Index (DXY) continues to strengthen, driven by market expectations of the Federal Reserve’s upcoming decisions, projecting into the May meeting. CME’s FedWatch Tool indicates a probability of over 60% that the Fed will maintain interest rates within the 5.25%-5.50% range in March, with a probability exceeding 60% for a quarter-point rate cut in May.

The US ADP Employment Change reported a 107K jobs increase for January, falling short of the expected 145K and marking a decrease from December’s 158K. Thursday’s focus will be on significant economic indicators like US Initial Jobless Claims, Nonfarm Productivity, and ISM Manufacturing PMI.

In summary, the EUR/USD pair faces downward pressure, testing key support at 1.0790, with potential further downside towards 1.0750. On the upside, immediate resistance lies at 1.0800, with further hurdles at 1.0826, 1.0850, and 1.0867.”

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 Japanese Yen.

USD 0.09%0.23%0.08%0.54%-0.20%0.29%0.11%
EUR-0.10% 0.12%-0.05%0.45%-0.27%0.19%0.01%
GBP-0.23%-0.15% -0.19%0.32%-0.40%0.05%-0.13%
CAD-0.08%0.04%0.18% 0.50%-0.22%0.24%0.07%
AUD-0.54%-0.47%-0.34%-0.52% -0.72%-0.28%-0.42%
JPY0.18%0.27%0.39%0.20%0.71% 0.44%0.28%
NZD-0.31%-0.17%-0.05%-0.21%0.26%-0.49% -0.17%
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).


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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