- EUR/USD fell by another fifth on Tuesday.
- The results of the ECB bank survey have reduced the euro's bullish potential.
- The ECB is widely expected to cut rates by another 25 basis points this week.
EUR/USD fell further to the bearish side on Tuesday, dropping by a fifth of 1% and falling below the 200-day exponential moving average (EMA). Price action ended below the 1.0900 handle for the first time since early August. Fiber is currently down nearly 3% from its late September peak just north of the 1.1200 handle.
European banks have widely reported the negative impact of the European Central Bank's (ECB) summer interest rate cuts, with banks within the EU reporting that although overall credit standards remain unchanged and lending to households has actually been eased. reported that consumer credit conditions remain tight. The recovery in mortgage demand has been driven solely by expectations of further interest rate cuts, suggesting that consumers are overborrowing in the short term, while the EU bank's net interest rate has declined as a result of the ECB's policy rate decisions. Revenue turned negative for the first time since joining the group. 2022.
The ECB's interest rate decision scheduled for Thursday is widely expected to be a 25bps rate cut in the market, which is expected to be a quarter of a percentage point cut in the main deposit rate. A similar 25bps reduction is expected. 3.65% to 3.4%.
Elsewhere in fiber-optic data, September US retail sales are expected to be released in US markets on Thursday. U.S. retail sales are expected to recover in September, rising 0.1% to 0.3% month over month.
EUR/USD price prediction
EUR/USD fell below the 200-day EMA and lost its hold on the 1.0900 handle. The stock has closed in the red on all but three of the past 12 consecutive trading days. The Moving Average Convergence Divergence (MACD) oversold warning suggests that Fiber's near-term momentum may have run its course and it may be ready for a bullish rebound from the 200-day EMA.
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 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 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. 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.
