The EUR/USD pair saw an increase of over 0.80% on Monday, spurred by reports that Chinese regulators have advised financial institutions to decrease their holdings in US Treasuries amid significant bond market fluctuations. Currently, the exchange rate stands at 1.1916, after bouncing back from a low of 1.1808 earlier in the day.
Reduced exposure to Chinese government bonds and a positive risk sentiment impact the dollar, euro surges
With a growing appetite for risk and Japan’s Prime Minister Takaichi winning decisively, the US dollar has dropped to its lowest level in six days, as indicated by the US dollar index (DXY).
Initially, the dollar/yen pair gained ground, but it reversed course after Japan’s chief diplomat, Jun Mimura, expressed that he’s closely monitoring currency fluctuations with a considerable level of unease.
In the US, economic data is sparse, with attention focused on the forthcoming New York Fed’s consumer expectations survey and remarks from Federal Reserve officials. Of particular interest is Tuesday’s release of the employment cost index, which encompasses retail sales and wage data.
Meanwhile, in Europe, speeches were lined up from European Central Bank (ECB) officials. ECB President Lagarde confirmed that Francois Villeroy will step down from the central bank on June 1.
This week’s euro price
The following table displays the weekly percentage change of the euro (EUR) against major currencies. This week, the euro showed strength against the Australian dollar.
| USD | EUR | GBP | JPY | CAD | Australian dollar | New Zealand dollar | Swiss franc | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.02% | -0.02% | 0.02% | -0.04% | 0.01% | 0.00% | -0.02% | |
| EUR | -0.02% | -0.04% | -0.04% | -0.06% | -0.01% | -0.01% | -0.04% | |
| GBP | 0.02% | 0.04% | 0.02% | -0.05% | 0.03% | 0.02% | -0.01% | |
| JPY | -0.02% | 0.04% | -0.02% | -0.05% | -0.00% | -0.01% | -0.04% | |
| CAD | 0.04% | 0.06% | 0.05% | 0.05% | 0.05% | 0.04% | 0.02% | |
| Australian dollar | -0.01% | 0.00% | -0.03% | 0.00% | -0.05% | -0.01% | -0.04% | |
| New Zealand dollar | -0.00% | 0.00% | -0.02% | 0.01% | -0.04% | 0.01% | -0.02% | |
| Swiss franc | 0.02% | 0.04% | 0.00% | 0.04% | -0.02% | 0.04% | 0.02% |
This heat map illustrates the percentage change among major currencies, showing the base currency on the left and the quote currency across the top. For example, selecting EUR from the left and moving to USD across the horizontal line displays the percentage change represented in the box for EUR/ USD.
Daily Market Movers: Euro strengthens as USD falters
- The US dollar index declined 0.86% to 96.82 against a basket of six primary currencies.
- The New York Fed’s Consumer Expectations Survey revealed that inflation expectations for the next year dropped from 3.4% to 3.1%. However, projections for three and five years remained steady at 3%.
- The survey also indicated that credit conditions have softened since December, and views on the labor market appear more optimistic.
- According to ECB President Gediminas Simkus, there’s an equal chance of interest rates being raised or cut, signaling that the rates are at neutral levels while growth is nearing potential. Meanwhile, ECB President Martin Kocher suggested that any policy shift would require a change in the macroeconomic landscape.
- During a plenary discussion in Strasbourg, France, ECB President Lagarde stated that inflation is expected to remain aligned with the ECB’s medium-term target of 2%.
Technical outlook: EUR/USD holds firm above 1.1900, bullish above 1.2000
The technical analysis for EUR/USD reveals a neutral to bearish outlook, as the pair has posted consecutive new lows, with the recent peak at 1.1926 still below the yearly high of 1.2079.
While the momentum indicates a bullish trend as shown by the Relative Strength Index (RSI), the pair needs to surpass its yearly high to continue its upward trajectory.
If the EUR/USD falls below 1.1900, it could easily test 1.1800, followed by the 20-day simple moving average (SMA) at 1.1786. Should it decline further, the next target would be the 50-day SMA at 1.1734, and then possibly down to 1.1700.
