EUR/USD rally loses steam with markets bracing for more US data | FXStreet
EUR/USD holds gains on Wednesday, although it remains capped below the 1.1600 line, trading at 1.1575 at the time of writing. European Central Bank’s (ECB) concerns about financial risks have dampened investors’ appetite for risk, although the higher hopes that the US Federal Reserve (Fed) will cut interest rates in December are keeping the US Dollar upside attempts limited for now.
US economic data released on Tuesday revealed a weaker-than-expected increase in Retail Sales in September, while the Producer Price Index continued to grow at a steady pace. The Consumer Confidence deteriorated, with households wary about higher costs and sluggish job prospects. These figures reinforced market expectations of immediate Fed interest rate cuts, adding pressure on the US Dollar.
Meanwhile, US and Ukrainian representatives continue working on the roadmap for a peace plan. US President Donald Trump affirmed on Tuesday that the original plan has been “fine-tuned with additional input from both sides” and that he will send special envoy Steve Witkoff to meet Russian President Vladimir Putin next week. This news and the positive reaction from Ukrainian President Volodymyr Zelensky have contributed to improving market sentiment and provided additional support to the Euro.
In the economic calendar, the US Durable Goods and Initial Jobless Claims will attract attention during Wednesday’s US trading session. Later on, ECB board member Philip Lane, and the president Christine Lagarde are expected to meet the press.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.09% | -0.11% | 0.19% | -0.16% | -0.55% | -1.11% | -0.17% | |
| EUR | 0.09% | -0.02% | 0.29% | -0.08% | -0.46% | -1.02% | -0.08% | |
| GBP | 0.11% | 0.02% | 0.31% | -0.05% | -0.43% | -1.00% | -0.06% | |
| JPY | -0.19% | -0.29% | -0.31% | -0.36% | -0.73% | -1.29% | -0.35% | |
| CAD | 0.16% | 0.08% | 0.05% | 0.36% | -0.39% | -0.96% | -0.01% | |
| AUD | 0.55% | 0.46% | 0.43% | 0.73% | 0.39% | -0.57% | 0.36% | |
| NZD | 1.11% | 1.02% | 1.00% | 1.29% | 0.96% | 0.57% | 0.95% | |
| CHF | 0.17% | 0.08% | 0.06% | 0.35% | 0.00% | -0.36% | -0.95% |
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).
Risk appetite and growing Fed easing hopes are weighing on the US Dollar
- The Euro is dragging support from a weaker US Dollar, as recent US figures boosted expectations of Fed interest rate cuts in December, while hopes of a peace agreement between Russia and Ukraine are contributing to improving market sentiment. Lower US Treasury yields are weighing on the US Dollar Index, which has depreciated about 0.6% over the last three days.
- The Euro retreated from session highs on Wednesday as the European Central Bank Financial Stability Review warned about the “elevated risks to financial stability in Europe” and reminded that the high public debt in some countries could strain bond markets.
- On Tuesday, US Retail Sales data showed that consumption grew 0.2% in September, undershooting expectations of a 0.4% increase, and following a 0.6% growth in August. Excluding automobiles, sales of all other products rose 0.3%, also below the 0.4% consensus, while August’s reading was revised down to 0.6% from the previously estimated 0.7% increase.
- The US Producer Prices Index (PPI) grew 0.3% in September after a 0.1% contraction in August. Year-on-year producer inflation remained steady at 2.7%, in line with the market consensus. The core PPI, on the other hand, eased to a 2.6% yearly pace from 2.9% in August, beating expectations of a 2.7% reading.
- The US Conference Board’s Consumer Confidence Index fell to a six-month lows of 88.7 in November from an upwardly revised 95.5 reading in October, completing a weakening picture of the US economic outlook and strengthening the case for further Fed monetary policy easing.
- A report by Reuters suggests that Kevin Hassett, the National Economic Council (NEC) Director, emerges as the best positioned to replace Jerome Powell as Fed Chair at the end of his term in May. Hasset has advocated for the need to cut interest rates to support economic growth and is expected to pursue a looser monetary policy. This news has added pressure on the US Dollar.
- On Wednesday, US Durable Goods Orders growth is expected to have slowed down to 0.3% in September, from 2.9% in August. Excluding transportation, orders are seen growing at a 0.2% pace, following a downwardly revised 0.3% in August.
- US Initial Jobless Claims are expected to increase to 225,000 from 220,000 in the week of November 21.
Technical Analysis: EUR/USD under growing bullish pressure near 1.1600
The EUR/USD bulls have taken control after breaching the 1.1550 resistance area and are testing the 1.1600 level, which, so far, remains in place. Technical indicators show an improving momentum. The 4-hour Relative Strength Index (RSI) is nearing oversold levels but not yet there, while the Moving Average Convergence Divergence (MACD) has crossed above the zero line, highlighting an improving bullish momentum.
Bulls remain capped below the mentioned resistance area above 1.1600 (November 18 and 19 highs). Further up, bulls are likely to be challenged at the top of a descending channel from the mid-October highs, which is now around 1.1625, ahead of the October 28 and 29 highs, near 1.1670.
On the downside, the previous resistance at 1.1550 (November 21 and 24 highs) is expected to provide support ahead of the 1.1500 psychological level. A bearish reaction below here would increase pressure towards the November 5 lows, near 1.1470, and the bottom of the descending channel from early October highs, now around 1.1425.
Euro FAQs
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%).
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.
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.
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.
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.