By Areena Fx- The Euro has bounced up from lows and returned above 1.1750, turning positive on the daily chart.
- The focus is on Fed officials’ speeches for further clues about the bank’s monetary policy outlook.
- Fed Chair Jerome Powell is expected to speak on Tuesday and might set the USD’s near-term direction.
EUR/USD has attracted some buyers to snap a three-day losing streak on Monday. The pair is trading at 1.1765 at the time of writing after bouncing from 1.1730 lows. The pair’s bullish momentum, however, remains frail as the US Dollar maintains its near-term bullish trend intact, ahead of a slew of Federal Reserve (Fed) speeches later today.
More than ten Fed policymakers are expected to deliver press conferences this week and provide their views about the central bank’s monetary policy plan. Investors will look with particular interest at the new member of the Fed’s Board of Governors, Stephen Miran, due to speak later on Monday. He is expected to defend his independence as policymaker and explain his reasons to opt for a jumbo interest rate cut last week, dissenting from the rest of the committee.
On Tuesday, Fed Chairman Jerome Powell will give a speech on the Economic Outlook at the Providence Chamber of Commerce, where he might delve into the need for a cautious approach to monetary policy. Last week, Powell’s stance offered some contrast to the market consensus, which prices in nearly one rate cut in each of the two monetary policy meetings remaining this year.
In Europe, European Central Bank (ECB) Chief Economist Philip Lane and German Bundesbank President Joachim might give some more clues about the ECB’s monetary policy. In between, the Eurozone’s Consumer Confidence will provide the main data point. Investors’ focus, however, will remain on Tuesday’s preliminary Manufacturing and Services Purchasing Managers Indexes (PMIs) for more insight into the region’s economic outlook.
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 | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.17% | -0.23% | -0.04% | 0.17% | 0.16% | 0.20% | -0.03% | |
| EUR | 0.17% | -0.04% | 0.10% | 0.31% | 0.28% | 0.34% | 0.10% | |
| GBP | 0.23% | 0.04% | 0.10% | 0.38% | 0.34% | 0.41% | 0.19% | |
| JPY | 0.04% | -0.10% | -0.10% | 0.20% | 0.17% | 0.24% | -0.00% | |
| CAD | -0.17% | -0.31% | -0.38% | -0.20% | -0.03% | 0.04% | -0.18% | |
| AUD | -0.16% | -0.28% | -0.34% | -0.17% | 0.03% | 0.07% | -0.15% | |
| NZD | -0.20% | -0.34% | -0.41% | -0.24% | -0.04% | -0.07% | -0.25% | |
| CHF | 0.03% | -0.10% | -0.19% | 0.00% | 0.18% | 0.15% | 0.25% |
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: The US Dollar maintains its positive trend intact
- The US Dollar (USD) has kept trading higher against most peers in doleful Asian markets on Monday, and there is no economic data in Europe to provide any fundamental support to the Euro (EUR). In that sense, the cautious market sentiment is expected to keep Euro upside attempts limited.
- On Friday, Fitch upgraded Italian Credit ratings to BBB+ from BBB for the first time in four years, amid the country’s improved political stability and Prime Minister Giorgia Meloni’s success in reducing the fiscal deficit.
- The economic calendar is devoid of key fundamental releases on Monday, but a batch of Fed speakers is likely to provide some guidance to the US Dollar. The main focus will be on Miran, a voter and a dove, recently appointed by US President Trump to replace Amanda Kuugler. Beyond him, the New York Fed president, John Williams, St louis President, Alberto Mussalem, Richmond Fed President Tom Barkin, and Cleveland Fed president, Beth Hammack will speak to the press.
- Over the weekend, ECB officials Martins Khazaks and Edward Scicluna assessed that the bank’s monetary policy is well placed at the moment and that there is no rush to cut interest rates further. These comments have offset ECB Mario Centeno’s dovish views, who pointed to a rate cut as the bank’s next move on Friday, and might have provided some support to the Euro.
Technical Analysis: EUR/USD approaches trendline support at 1.1725
,EUR/USD has been correcting lower since last week’s reversal from 1.1918 highs. Technical indicators are in bearish territory with the Relative Strength Index (RSI) still above oversold levels, suggesting that there might be scope for further downtrend.
The pair, however, is approaching the trendline from August 27 lows, where it might find some support. Below there, the next target would be the September 12 low at 1.1700, ahead of the September 11 low, near 1.1660. To the upside, Friday’s high near 1.1795 is seen as the first relevant resistance area, ahead of the September 18 high, near 1.1850, and the September 16 high at 1.1878.
Fed FAQs
What does the Federal Reserve do, how does it impact the US Dollar?
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
How often does the Fed hold monetary policy meetings?
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
What is Quantitative Easing (QE) and how does it impact USD?
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
What is Quantitative Tightening (QT) and how does it impact the US Dollar?
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.