- The euro fell from familiar technical levels following the ECB's dovish stance.
- In Europe, economic indicators are expected to be weak until next Tuesday's GDP announcement.
- The broader market will focus on the US PCE price index on Friday as it concludes the trading week.
The euro (EUR) fell on Thursday after the European Central Bank (ECB) struck a dovish tone in its latest monetary policy statement, sending the currency weaker against most major currencies. ECB President Christine Lagarde has warned that the consensus is that discussions of interest rate cuts are premature given the risks from rising prices, but in money markets the ECB will cut interest rates by 50 basis points by June. This view has become stronger. Wages and a still-strong job market.
With European economic data remaining flat this week, markets will be focused on Friday's US Personal Consumption Expenditures (PCE) Price Index, a snapshot of inflation. European investors will have to wait until next Tuesday's EU gross domestic product (GDP) update for economic headlines from the euro side.
Daily Digest Market Trends: Euro falls on Thursday as ECB turns dovish
- European Central Bank President Christine Lagarde warned on Thursday that risks remained and it was too early to start discussing interest rate cuts.
- Despite easing economic conditions originating in Europe and stagnant growth rates, key inflation risks remain high.
- ECB President Lagarde said interest rate hikes were starting to “forcibly affect the financing environment”.
- The ECB highlighted the inflation risks from tensions in the Middle East and stressed that more time is needed for economies to further progress through the deflation process.
- Despite reductions in some measures, overall domestic price pressures remain high.
- European money markets rose in response to the ECB's decision to cut interest rates, with expectations added that interest rates would be cut by 50bps by June and 150bps by the end of 2024.
- ECB press conference: Lagarde explains decision to keep interest rates unchanged and talks about policy outlook
- On the US side, gross domestic product (GDP) growth in the fourth quarter exceeded expectations.
- U.S. GDP growth in the fourth quarter was 3.3%, compared to the expected 2.0%, slower than expected from 4.9% in the previous quarter.
- The number of new U.S. unemployment insurance claims for the week ending January 19 also rose to 214,000, exceeding the previous week's estimate of 189,000 (upwardly revised from 187,000) and 200,000.
- New jobless claims in the U.S. exceeded the four-week average of 202,250.
- On Friday, the U.S. PCE price index will be released, and markets will focus on key inflation data that will determine the Fed's direction.
today's euro price
The table below shows the percentage change of the Euro (EUR) against the major listed currencies today. The euro was the strongest against the Swiss franc.
| USD | EUR | GBP | CAD | australian dollar | JPY | new zealand dollar | Swiss franc | |
| USD | 0.44% | 0.26% | -0.18% | 0.02% | 0.19% | -0.04% | 0.52% | |
| EUR | -0.45% | -0.17% | -0.63% | -0.45% | -0.26% | -0.51% | 0.09% | |
| GBP | -0.27% | 0.17% | -0.45% | -0.27% | -0.08% | -0.33% | 0.25% | |
| CAD | 0.17% | 0.62% | 0.44% | 0.18% | 0.36% | 0.12% | 0.70% | |
| australian dollar | 0.00% | 0.43% | 0.25% | -0.19% | 0.19% | -0.06% | 0.53% | |
| JPY | -0.19% | 0.26% | 0.07% | -0.37% | -0.19% | -0.24% | 0.33% | |
| new zealand dollar | 0.08% | 0.49% | 0.32% | -0.13% | 0.06% | 0.25% | 0.57% | |
| Swiss franc | -0.54% | -0.10% | -0.27% | -0.71% | -0.52% | -0.33% | -0.59% |
The heat map shows the percentage change between major currencies. The base currency is selected from the left column and the quote currency is selected from the top row. For example, if you select Euro from the left column and move along the horizontal line to Japanese Yen, the percentage change displayed in the box represents EUR (base)/JPY (estimate).
Technical analysis: Euro falls on ECB trend, EUR/USD rejects again from 1.0900
The euro (EUR) fell against the US dollar (USD) on Thursday, with EUR/USD falling below the 1.0900 handle and seeing another technical rejection from the 200-hour simple moving average (SMA) around 1.0885. .
The pair saw heavy bidding at the 200-day SMA near 1.0840 and returned to familiar lows. EUR/USD is stuck in a widening congestion trap between his 50-day SMA and 200-day SMA as technical consolidation patterns continue to prevent meaningful momentum in either direction.
EUR/USD hourly chart
EUR/USD daily chart
Euro Frequently Asked Questions
The euro is the currency of the 20 European Union countries that belong to the euro area. It is the second most traded currency in the world after the US dollar. In 2022, Accounted for It accounts for 31% of all foreign exchange transactions and has an average daily trading volume of over $2.2 trillion.
EUR/USD is the most frequently traded currency pair in the world. accounting An estimated 30% discount on all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB), located in Frankfurt, Germany, is the reserve bank of the euro area. The ECB sets interest rates and controls monetary policy.
The ECB's main task is to maintain price stability, which means controlling inflation or stimulating growth. The main means of doing so is raising or lowering interest rates. Relatively high interest rates, or expectations of rising interest rates, usually benefit the euro, and vice versa.
The ECB Governing Council decides monetary policy at its eight annual meetings. Decisions will be made by the heads of the euro zone national banks and the six permanent members of the ECB, including Christine Lagarde, president of the ECB.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric indicator for the euro. If inflation rises more than expected, especially above the ECB's 2% target, the ECB will mandate interest rate hikes to rein in inflation.
Relatively high interest rates compared to other countries typically benefit the euro, as it makes the region more attractive to global investors as a place to park their funds.
The data release will gauge the health of the economy and could have an 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 would that attract more foreign investment, but it could also prompt the ECB to raise interest rates, which could directly lead to a stronger euro. Otherwise, if economic indicators are weak, the euro is likely to weaken.
Economic data for the euro area's four largest economies (Germany, France, Italy, and Spain) is particularly important, as they account for 75% of the euro area economy.
Another important data regarding the euro is the trade balance. This indicator measures the difference between what a country earns from exports and what it spends on imports over a given period of time.
If a country produces highly sought-after export goods, the value of its currency increases purely due to the additional demand generated from foreign buyers seeking to purchase these goods. Therefore, if the net trade balance is positive, the currency strengthens, and vice versa if it is negative.
