- EUR/USD extended its gains as the US dollar weakened following mixed US data.
- The euro could face difficulties as markets speculate about an ECB rate cut in June.
- If US NFP declines as expected, the US dollar could suffer further losses.
EUR/USD extended its gains for the second day in a row, rising to near 1.0880 during Friday’s European session. EUR/USD gained upside support following mixed economic data from the United States (US). Furthermore, low US bond yields are contributing to increased pressure on the US dollar (USD). A report showing increased stress in regional bank New York Community Bancorp’s commercial real estate portfolio put downward pressure on U.S. Treasury yields.
The euro faced weakness after weak German consumer inflation data released on Wednesday, as market sentiment tilted towards the possibility of a speculative interest rate cut in June by the European Central Bank (ECB). However, European currencies began to recover after mixed inflation figures for the eurozone were released on Thursday.
The US Dollar Index (DXY), which measures the performance of the US dollar (USD) against a basket of six major currencies, has struggled to recover from recent losses. DXY is trading around 103.00, and the 2-year and 10-year US Treasury yields are hovering around 4.23% and 3.88%, respectively, at the time of writing.
U.S. new jobless claims rose to 224,000 for the week ending Jan. 26, exceeding both the previous increase of 215,000 and the expected 212,000. However, the ISM Manufacturing PMI improved to 49.1 from 47.1 previously, exceeding the January estimate of 47.0. On Friday, key labor statistics such as average hourly wages and nonfarm payrolls (NFP) in the U.S. are scheduled to be released.
Daily Digest Market Trends: EUR/USD expands as US economic indicators are mixed
- The preliminary Eurozone Consumer Price Core Harmonized Index (YoY) rose 3.3% in January, higher than the 3.2% expected rise, but lower than the previous 3.4%.
- The annual consumer price index was 2.8%, as expected, compared to 2.9% last time. Compared to the previous month, sales decreased by 0.4%, widening from the 0.2% increase in December.
- The German Consumer Price Index (CPI) rose 2.9% year-on-year in January, lower than the 3.3% expected and down from 3.7% in December.
- Germany’s consumer inflation rate met expectations, rising to 0.2% month-on-month from 0.1% the previous month. The harmonized consumer price index rose 3.1% year-on-year, lower than the previous year’s 3.8% rise.
- Preliminary U.S. nonfarm productivity rose 3.2% in the fourth quarter, beating expectations of 2.5% but down from 4.9%.
- The number of U.S. Challenger job cuts in January increased to 82,307 from 34,817 in December.
- U.S. unit labor costs rose 0.5% against expectations of 1.7% in the fourth quarter, a sharp change from a previous decline of 1.1%.
Technical analysis: EUR/USD moves towards psychological barrier at 1.0900
EUR/USD rose to around 1.0880 on Friday, approaching near-term resistance near the psychological level around 1.0900. A breakout of the latter could put upward pressure on the pair, pushing it above the 38.2% Fibonacci retracement level at 1.0915 and potentially clearing the next barrier near the major level at 1.0950.
On the downside, the major level of 1.0850 appears as a major support, which coincides with the 21-day exponential moving average (EMA) of 1.0846. A break below this area could bring EUR/USD closer to the psychological support at 1.0800 and then the weekly low at 1.0779.
EUR/USD: 4-hour chart
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 Japanese yen.
| USD | EUR | GBP | CAD | australian dollar | JPY | new zealand dollar | Swiss franc | |
| USD | -0.08% | -0.07% | -0.07% | -0.46% | 0.08% | -0.20% | -0.21% | |
| EUR | 0.07% | 0.02% | 0.01% | -0.39% | 0.14% | -0.13% | -0.14% | |
| GBP | 0.07% | -0.01% | 0.00% | -0.41% | 0.13% | -0.14% | -0.15% | |
| CAD | 0.06% | -0.02% | -0.01% | -0.40% | 0.14% | -0.14% | -0.16% | |
| australian dollar | 0.46% | 0.39% | 0.43% | 0.40% | 0.53% | 0.27% | 0.25% | |
| JPY | -0.07% | -0.14% | -0.13% | -0.13% | -0.55% | -0.26% | -0.28% | |
| new zealand dollar | 0.20% | 0.11% | 0.13% | 0.13% | -0.26% | 0.28% | -0.02% | |
| Swiss franc | 0.21% | 0.13% | 0.15% | 0.15% | -0.25% | 0.28% | 0.02% |
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).
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 is to raise or lower 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 ECB President Christine Lagarde.
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. As well as attracting more foreign investment, that could 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.
