- EUR/USD rose to around 1.0440 during a period of low trading volume.
- Due to the ECB's dovish leadership and the possibility of a trade war with the US, the euro is expected to end the year down by around 5.5% against the US dollar.
- This week, US investors will focus on December US ISM manufacturing PMI data.
EUR/USD rose to around 1.0440 in European trading on Monday. Major currency pairs rose as the US dollar (USD) weakened amid thin volume in year-end trading. The U.S. Dollar Index (DXY), which tracks the value of the U.S. dollar against six major currencies, has fallen to near 107.85, but is on track to end the year near its all-time high.
Rising US Treasury yields are an important tailwind for the US dollar. U.S. Treasury yields have accelerated significantly in the past few months as investors bet new tariff hikes and tax cuts under the Trump administration will boost economic growth and inflation. In this scenario, the Federal Reserve would be forced to take a hawkish stance on monetary policy.
The Fed indicated in its latest dotplot that it will reduce the rate of interest rate cuts in 2025, as policymakers generally see the federal funds rate heading towards 3.9% by the end of 2025. After a hawkish interest rate cut in December, investment banking firm Goldman Sachs expects the central bank to reduce its rate cuts. The next interest rate cut will be in March. The company also expects two more rate cuts in June and September.
This week, investors will pay close attention to December US ISM Manufacturing Purchasing Managers Index (PMI) data, which will be released on Friday. The PMI index is expected to decline slightly from 48.4 to 48.3, suggesting manufacturing output contracted at a slightly faster pace.
Daily Digest Market Movement: EUR/USD rises at the beginning of holiday-shortened week
- EUR/USD rose in illiquid pre-New Year trading conditions on Monday, but the calendar year is expected to end almost 5.5% lower, as the European Central Bank (ECB) maintained dovish guidance for 2024. The last three months of the year were particularly hard hit. About interest rates. In addition, market participants are concerned about economic growth in the eurozone, as President-elect Donald Trump's tariff hikes are likely to shock the eurozone's export sector.
- The ECB is expected to cut its deposit facility interest rate by 100 basis points (bps) to 3% this year, and to 2% by the end of June 2025, which policymakers consider a neutral rate. This suggests that the ECB will continue to lower policy interest rates. The main borrowing interest rate will be lowered by 25 basis points at each meeting in the first half of next year.
- Many ECB policymakers have expressed concern about the risk of inflation falling below the central bank's 2% target, given political uncertainty in Germany and the possibility of a trade war with the United States. ECB officials have expressed opposing views on how continental Europe should deal with the US trade situation.
- Last week, ECB President Christine Lagarde said in an interview with the Financial Times (FT) that retaliation is a “bad approach” as she believes trade restrictions and retaliatory measures “can only be bad for the global economy as a whole.” He said that. . ”.
- In contrast, ECB policymaker and Finland's central bank governor Olli Rehn said, “Negotiations are preferable, showing in advance that the United States is prepared to take countermeasures if it threatens Europe with higher tariffs.'' “This will strengthen the EU's negotiating position.”
- On the economic front, the preliminary Spanish Consumer Price Index (HICP) for December exceeded expectations. On a year-on-year basis, price pressure rose by 2.8%, higher than the 2.6% expected and the previously announced 2.4%. Month-over-month HICP growth was 0.4%, exceeding expectations of 0.3%. Underlying inflation was flat in November.
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 US dollar.
| USD | EUR | GBP | JPY | CAD | australian dollar | new zealand dollar | swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.18% | -0.16% | 0.00% | -0.22% | -0.28% | -0.55% | 0.00% | |
| EUR | 0.18% | 0.02% | 0.13% | -0.10% | -0.17% | -0.42% | 0.14% | |
| GBP | 0.16% | -0.02% | 0.16% | -0.11% | -0.19% | -0.44% | 0.12% | |
| JPY | 0.00% | -0.13% | -0.16% | -0.25% | -0.24% | -0.40% | 0.04% | |
| CAD | 0.22% | 0.10% | 0.11% | 0.25% | -0.06% | -0.25% | 0.23% | |
| australian dollar | 0.28% | 0.17% | 0.19% | 0.24% | 0.06% | -0.25% | 0.31% | |
| new zealand dollar | 0.55% | 0.42% | 0.44% | 0.40% | 0.25% | 0.25% | 0.56% | |
| swiss franc | -0.01% | -0.14% | -0.12% | -0.04% | -0.23% | -0.31% | -0.56% |
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 EUR from the left column and move to USD along the horizontal line, the percentage change displayed in the box represents EUR (Basic)/USD (Quote).
Technical analysis: EUR/USD consolidates around 1.0400
EUR/USD has been trading in a narrow range since Monday, above a two-year low of 1.0335. The outlook for major currency pairs remains bearish as the 20-day and 50-day exponential moving averages (EMAs) are declining at 1.0464 and 1.0588, respectively.
The 14-day Relative Strength Index (RSI) hovers around 40.00. Sustaining below that level could trigger downside momentum.
On the downside, the pair could break below the two-year low at 1.0330 before falling to round-level support around 1.0200. On the contrary, the 20-day EMA near 1.0500 will be a key barrier for euro bulls.
