- The euro rose as the US dollar recovered amid weak market sentiment.
- Weaker-than-expected US PPI on Friday reignited hopes of a Fed rate cut, hurting the US dollar
- There is little trading on Monday as the US market is closed for the holiday.
The euro (EUR) has fallen after a strong start to the week. In the absence of the first macroeconomic announcement, the knee-jerk reaction of European markets, which have fallen into negative territory, and lackluster economic indicators in the euro area are weighing on the common currency.
With US markets closed for Martin Luther King Jr.'s birthday, the US dollar has some buying picks as the market shifts focus from last Friday's weak US PPI data. However, the dollar index (DXY) is still stuck within last week's trading range, failing to move much further from its late December lows.
Traders on Friday welcomed an unexpected decline in the US producer price index (PPI) in December. These numbers raised hopes for Fed easing, despite the rise in CPI data seen earlier this week and Fed officials' warnings against excessive optimism. U.S. Treasury yields fell, with the benchmark 10-year Treasury yield below 4%, and the U.S. dollar also fell, ending the week almost flat.
This week's focus will be on the Eurozone Consumer Price Index (CPI) and US retail sales data. These numbers provide further insight into the economic outlook for the eurozone and the US, and could help EUR/USD break out of the horizontal range that is restraining price action.
Daily Digest Market Trends: Euro loses gains as USD strengthens due to worsening risk environment
- The euro rose in calm trading on Monday as expectations for Fed interest rate cuts weighed on the US dollar.
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Eurozone industrial production contracted by 0.3% in December, as expected. Compared to the previous year, production decreased by 6.8%, much higher than the expected 5.9%.
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In Germany, preliminary figures for GDP this year fell by 0.3%, slowing from the previous 1.8% increase.
- On Friday, US PPI for December fell 0.1% month-on-month, contrary to expectations for a 0.1% rise, reigniting hopes for a Fed rate cut in March.
- According to CME Group's FedWatch tool, there is a more than 70% chance that the Fed will cut interest rates in March, and a 75% chance of another rate cut in May.
- Investors are ignoring comments from Fed officials who assert that it is still too early to raise CPI or cut interest rates.
- European Central Bank (ECB) President Christine Lagarde struck an unprecedentedly bearish tone on Friday, hinting at an end to rate hikes, weighing on euro bulls.
- Philip Lane, ECB board member and Bank of Ireland governor, gave up on cutting interest rates until June in an interview over the weekend. This gave some support to the euro.
- In Wednesday's eurozone calendar, Eurostat said CPI accelerated to 2.9% y/y in December from 2.5% y/y in November, while core inflation slowed to an annualized pace of 3.4% from 3.6% previously. It is expected that this will be confirmed.
- Also on Wednesday, US retail sales are expected to rise in December, which could limit dollar weakness.
Technical analysis: EUR/USD maintains broad positive trend
EUR/USD continues to trade in a narrow range on Monday, with price action trapped between the 4-hour 100SMA and 200SMA, and the RSI hovering around the 50 level, with no clear direction. suggests a lack of.
However, the overall trend remains positive, with price trends reflecting higher highs and higher lows. Immediate support remains at 1.0930, with the 4-hour 200 SMA matching the price. Below this, trend line support from the early November low (currently around 1.0900) and the January 5 low at 1.0875 are likely to challenge the bears.
On the upside, the pair needs to break through the strong resistance at 1.1000, where it forms a double top. This level closes the way to a small resistance level at 1.1075, ahead of the December peak at 1.1145.
today's euro price
The table below shows the percentage change of the Euro (EUR) against the major listed currencies today. In contrast, the euro was the strongest.
| USD | EUR | GBP | CAD | australian dollar | JPY | new zealand dollar | Swiss franc | |
| USD | -0.01% | 0.04% | 0.04% | 0.36% | 0.36% | 0.58% | 0.06% | |
| EUR | 0.01% | 0.04% | 0.05% | 0.38% | 0.37% | 0.60% | 0.06% | |
| GBP | -0.04% | -0.05% | 0.00% | 0.33% | 0.32% | 0.53% | 0.03% | |
| CAD | -0.03% | -0.04% | 0.00% | 0.34% | 0.31% | 0.54% | 0.02% | |
| australian dollar | -0.37% | -0.38% | -0.32% | -0.33% | -0.01% | 0.22% | -0.32% | |
| JPY | -0.35% | -0.37% | -0.44% | -0.32% | 0.01% | 0.24% | -0.29% | |
| new zealand dollar | -0.58% | -0.60% | -0.56% | -0.55% | -0.23% | -0.23% | -0.53% | |
| Swiss franc | -0.06% | -0.07% | -0.03% | -0.02% | 0.32% | 0.31% | 0.52% |
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. 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.
