- EUR/USD fell on Thursday with the 200-day EMA revealed.
- This week, Fiber will focus on US statistics as euro statistics remain scant.
- Scheduled to be released on Friday: US PPI inflation rate, unit of consumer sentiment.
EUR/USD managed to maintain a finger grip on the chart paper north of the 1.9000 handle. Fiber closed lower but recovered enough to pull back from a deeper test of the 200-day exponential moving average (EMA) near the 1.0900 handle.
U.S. headline CPI inflation fell less than expected through the year ended September, falling from 2.5% to 2.4%. The median market estimate was for a 2.4% increase from the previous year. Meanwhile, the US core CPI inflation rate in September recorded a year-on-year increase, rising to 3.3% from 3.2% last time.
The number of new U.S. jobless claims for the week ending October 4 unexpectedly increased to 258,000 compared to the previous week, marking the highest number of new jobless claims since June 2023.
Interest rate markets were confused on Thursday with mixed data influencing interest rates. Rising unemployment fuels expectations for a rate cut as the Federal Reserve seeks to maintain the U.S. labor market, while inflation remains high and investors are weighing the pace of rate cuts. It has become difficult to expect acceleration and depth.
Few key European economic data will be released on Friday, leaving textile traders at the mercy of overall greenback flows as they close out the trading week.
US Producer Price Index (PPI) inflation is expected to follow US markets during trading. Full-year core PPI growth in September is expected to accelerate to 2.7% year-on-year from 2.4% in the previous month.
The University of Michigan's October five-year consumer inflation expectations will also be printed on Friday, along with the UoM Consumer Sentiment Index. The Consumer Sentiment Index is expected to rise from 70.1 to 70.8, with the five-year Consumer Sentiment Forecast not confirming the forecast, but rising last month.
EUR/USD price prediction
The EUR/USD pair was trading around 1.09343, down slightly on the day by 0.05% as selling pressure continues to weigh on the currency pair. The price action is testing the 200-day exponential moving average (EMA) at 1.09036, an important support level that could determine the next direction of the pair. A break below this level could accelerate downside momentum and open the door for further declines towards the 1.08500 level, a key psychological barrier. The 50-day EMA, currently at 1.10289, is acting as resistance after breaking below it during the recent bear market.
The overall trend appears to be shifting towards a more bearish outlook in the short term. The sharp decline from the recent highs around 1.1200 indicates that the bullish momentum has largely faded. Prices have consistently lowered their highs and lows, showing a clear downward trend. Traders will be watching to see how the pair reacts around the 200-day EMA in the coming sessions. If the price continues to move below this level, we could see a significant downward shift in market sentiment.
In a broader context, the EUR/USD price movement reflects the market's increasing sensitivity to economic releases and central bank decisions. The pair's recent decline has coincided with the US dollar's strength on expectations of monetary tightening by the Federal Reserve. Eurozone economic indicators such as inflation and growth rates will be key in determining whether the euro will find support at current levels or whether further downside risks materialize. Traders should be on the lookout for signs of a reversal, but for now, technical setups point to further weakness.
EUR/USD daily chart
Euro Frequently Asked Questions
The euro is the currency of the 19 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 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.
