The EUR/USD pair saw a slight decrease of 0.17% during North American trading on Friday. This decline followed comments from US President Donald Trump, who moderated his tough stance on trade with China, leading the pair to trade around 1.1666 after reaching an intraday peak of 1.1728.
Euro dips from daily highs as market sentiment improves and Fed discussions remain cautiously dovish
With Wall Street’s opening on the horizon, risk appetite appeared to recover as Trump noted that high tariffs on China were unsustainable, hinting they might raise tensions. He also mentioned an upcoming meeting with Xi Jinping during the Asia-Pacific regional gathering in South Korea.
This news helped the US dollar regain some lost ground. The dollar index (DXY), which measures the dollar against a group of currencies, climbed 0.09% to reach 98.42.
In the absence of fresh economic data, traders are mostly reacting to the comments from Federal Reserve officials. Many of these remarks leaned dovish, particularly those from Governor Christopher Waller. Meanwhile, both St. Louis Fed President Alberto Mussallem and Minneapolis Fed President Neel Kashkari expressed support for additional rate cuts but stressed concerns about persistently high inflation.
In Europe, the Harmonized Index of Consumer Prices (HICP) met expectations for September.
Although the upcoming US economic data remains unclear, market participants are eagerly anticipating the release of the Consumer Price Index (CPI) data next Friday.
This week’s euro price
The table below outlines the percentage change of the Euro (EUR) against major currencies this week, highlighting that the euro was strongest against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.38% | -0.57% | -0.92% | 0.14% | 0.20% | 0.10% | -1.03% | |
| EUR | 0.38% | -0.19% | -0.49% | 0.51% | 0.67% | 0.51% | -0.66% | |
| GBP | 0.57% | 0.19% | -0.26% | 0.70% | 0.85% | 0.70% | -0.50% | |
| JPY | 0.92% | 0.49% | 0.26% | 1.00% | 1.07% | 1.08% | -0.17% | |
| CAD | -0.14% | -0.51% | -0.70% | -1.00% | 0.03% | 0.00% | -1.19% | |
| australian dollar | -0.20% | -0.67% | -0.85% | -1.07% | -0.03% | -0.14% | -1.33% | |
| new zealand dollar | -0.10% | -0.51% | -0.70% | -1.08% | -0.00% | 0.14% | -1.19% | |
| swiss franc | 1.03% | 0.66% | 0.50% | 0.17% | 1.19% | 1.33% | 1.19% |
This table shows the percentage changes between major currencies, with the base currency from the left column and the quote currency from the top row.
Daily market trends: Dollar gains despite Fed’s dovish outlook
- Several Federal Reserve officials offered comments on Friday, adopting a somewhat dovish viewpoint. St. Louis Fed President Alberto Moussallem expressed support for a rate cut during the upcoming October meeting while reaffirming the need to bring inflation back to the targeted 2% level.
- Federal Reserve Board Chairman Christopher Waller echoed these sentiments, and Minneapolis Fed President Neel Kashkari noted that the economy is “not slowing down as much as we think,” indicating some resilience based on recent economic indicators.
- Eurozone inflation data for September generally matched forecasts, reflecting stability. Core HICP increased 0.1% month-on-month and 2.4% year-on-year, which is slightly above the anticipated 2.3%. Meanwhile, headline HICP rose 0.1% month-on-month and 2.2% annually, aligning with expectations.
- European Central Bank (ECB) officials maintained a cautious tone, with Olaf Slijpen acknowledging that while the current policy is in “good shape,” it may need adjustments. Joachim Nagel of the ECB stated that immediate action on interest rates isn’t necessary.
- On Tuesday, Fed Chairman Jerome Powell demonstrated a dovish stance, acknowledging labor market weaknesses and suggesting a shift towards more “neutral” interest rates.
- Currently, money markets are fully anticipating a 25 basis point rate cut for the Fed’s meeting on October 29, with a 97% likelihood suggested by the Prime Market Terminal Stochastic Tool.
Technical outlook: EUR/USD below 100-day SMA indicates potential for further decline
The technical outlook for EUR/USD appears bearish despite some recent improvements. After achieving a weekly peak of 1.1728, the common currency fell below 1.1700, indicating a potential for further decline.
The first support level for EUR/USD is at the 100-day simple moving average (SMA) around 1.1648. If breached, the next targets are 1.1600, followed by 1.1550, and then 1.1500.
On the resistance side, there are key levels at the 50-day SMA of 1.1691, 1.1700, and the daily high of 1.1728. If the latter is surpassed, 1.1800 would become the next significant resistance, along with the July 1 high of 1.1830.
