EUR/USD Forecast and News
EUR/USD drops to near 1.0850, further support at nine-day EMA
EUR/USD continues to lose ground, trading around 1.0860 during the Asian hours on Friday. From a technical perspective on a daily chart, analysis indicates a sideways trend for the pair as it continues to lie within the symmetrical triangle.
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EUR/USD Technical Overview
On the upside, EUR/USD is expected to face first resistance at the May top of 1.0894 (May 16), seconded by the March peak of 1.0981 (March 8) and the weekly high of 1.0998 (January 11), all before reaching the critical 1.1000 mark.
In the other direction, a break below the 200-day SMA of 1.0789 could prompt the May low of 1.0649 (May 1) to emerge on the horizon ahead of the 2024 bottom of 1.0601 (April 16) and the November 2023 low of 1.0516 (November 1). Once this zone is cleared, the pair may go for the weekly low of 1.0495 (October 13, 2023), the 2023 bottom of 1.0448 (October 3), and the 1.0400 round milestone.
So far, the 4-hour chart indicates some correction from recent peaks. That said, there is an immediate uphill challenge at 1.0894, followed by 1.0942. Meanwhile, the initial contention is at 1.0790, followed by 1.0766. The relative strength index (RSI) dropped below 66.
Fundamental Overview
The US Dollar (USD) managed to leave behind part of its recent deep retracement and sparked a corrective decline in EUR/USD, although not before hitting new tops in levels just shy of 1.0900 the figure on Thursday.
The decent bounce in the Dollar coincided with a generally positive performance in US yields across different durations, as investors kept assessing the latest US inflation data and Thursday’s steady pace of weekly Initial Claims and the monthly pullback in the Philly Fed Manufacturing Index.
This situation continues to anticipate the Federal Reserve (Fed) beginning its easing cycle in September, in contrast to the possibility of the European Central Bank (ECB) initiating interest rate cuts potentially as early as June.
Regarding the latter, the CME Group’s FedWatch Tool suggests nearly 70% probability of lower interest rates by September.
This notion gained further support after Federal Reserve Chief Jerome Powell expressed his expectation of ongoing decrease in US inflation through 2024, echoing the trend from last year. He also suggested that further interest rate hikes by the Fed seemed unlikely.
Still around the Fed, Loretta Mester, President of the Federal Reserve Bank of Cleveland, stated that maintaining the current levels of Fed policy would aid in bringing still-elevated inflation back to the 2% target. Thomas Barkin, President of the Richmond Federal Reserve, highlighted that inflation has not yet reached the desired level for the Fed, with companies in the service sector still perceiving they have pricing power. Meanwhile, John Williams, President of the Federal Reserve Bank of New York, acknowledged the softer consumer inflation data, but cautioned that this alone does not justify an imminent interest rate cut by the central bank.
Meanwhile, the unchanged monetary policy landscape highlights the divergence between the Federal Reserve and other G10 central banks, particularly the European Central Bank (ECB).
Regarding the ECB, recent statements from policymakers indicate an increasing likelihood of the bank commencing its easing process in June, though uncertainties persist about the ECB’s decisions beyond the summer. In this context, Board member Hernandez de Cos stated on Thursday that given recent indicators suggesting a more controlled price evolution, the bank is poised to begin rate cuts in June. Additionally, his colleague Mario Centeno mentioned that inflation in the bloc is steadily decreasing towards 2%, indicating that ECB interest rates will inevitably begin to decrease, though he refrained from predicting whether this would occur at the upcoming June meeting. Finally, member Martin Kazaks remarked that while a rate cut in June is likely, the institution is not in a rush to ease policy, suggesting subsequent actions could be spaced out for proper assessment.
Looking forward, the relatively subdued economic fundamentals in the Eurozone, coupled with the resilience of the US economy, support the ongoing narrative of Fed-ECB policy divergence and lean towards a stronger Dollar in the longer run, especially considering the rising probability of the ECB reducing rates well before the Fed.
Given this perspective, the potential for further weakness in EUR/USD should be considered in the medium term.
SPECIAL WEEKLY FORECAST
Interested in weekly EUR/USD forecast? Our experts make weekly updates forecasting the next possible moves of the Euro-US Dollar pair. Here you can find the most recent forecast by our market experts:
EUR/USD: A better mood puts pressure on the US Dollar Premium
The EUR/USD pair seesawed in a tight range just above the 1.0700 threshold for most of the week, with the US Dollar (USD) finally giving up and extending its slide while heading into the weekly close.
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Editors' picks
EUR/USD drops to near 1.0850, further support at nine-day EMA
EUR/USD continues to lose ground, trading around 1.0860 during the Asian hours on Friday. From a technical perspective on a daily chart, analysis indicates a sideways trend for the pair as it continues to lie within the symmetrical triangle.
GBP/USD posts modest gains above 1.2650, focus on the Fedspeak
The GBP/USD pair posts modest gains near 1.2670 during the Asian session on Friday. Meanwhile, the USD Index recovers some lost ground after retracing to multi-week lows near 104.00 in the previous session.
USD/JPY climbs to near 156.00 as BoJ maintains bond-buying
USD/JPY rose to near 155.90 during the Asian session on Friday as the Japanese Yen encountered renewed pressure. This was sparked by the Bank of Japan maintaining its bond-buying amounts from the previous operation, opting against a surprise cut to debt purchasing earlier in the week.
Gold price loses momentum, with Fed speakers in focus
Gold price trades with a bearish bias on Friday after retreating from the nearly $2,400 barrier. The bullish move of precious metals in the previous sessions was bolstered by the softer-than-expected US inflation data in April, which triggered hope for rate cuts from the US Federal Reserve.
Oil extends the rally near $78.90, US inflation data boosts Fed rate cut expectations
Western Texas Intermediate, the US crude oil benchmark, is trading around $78.90 on Friday. The black gold edges higher amid the recent drop in US crude inventories and the possible interest rate cuts by the Federal Reserve.
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EUR/USD Yearly forecast
How could EUR/USD move this year? Our experts make a EUR/USD update forecasting the possible moves of the euro-dollar pair during the whole year. Don't miss our 2024 EUR/USD forecast!
EUR/USD FORECAST 2024
In the EURUSD 2024 Forecast, our analyst, Valeria Bednarik, anticipates gains for the next couple of months. The Eurozone economy would need to show steady signs of recovery to prevent EUR/USD from collapsing below 1.0390 in the year's second half. Read more details about the forecast.
The pair traded as low as 1.0447 and as high as 1.1275 throughout 2023, with currencies moving on sentiment.
MOST INFLUENTIAL POLITICAL EVENTS IN 2024 FOR EUR/USD
There is a note of color that would stand out in the upcoming months: the US 2024 presidential election that will take place on November 5. The contest nomination will start as soon as January and run until June. The pinch of drama comes from Donald Trump’s desire to represent Republicans once again. A potential second government of Donald Trump could mean higher inflationary pressures as Trump could reintroduce tariffs on imports and push against the agreements between China and the Biden administration.
Influential Institutions & People for the EUR/USD
The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:
The European Central Bank (ECB)
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Christine Lagarde is the President of this organism.
ECB Official Website, on Twitter and YouTube
The Federal Reserve Bank (Fed)
On the other
FED Official Website, on Twitter and Facebook
Christine Lagarde
Christine Lagarde was born in 1956 in Paris, France. Graduated from Paris West University Nanterre La Défense and became President of the European Central Bank in November 1st 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007–2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005–2007).
Lagarde on ECB'S Profile and Wikipedia
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
ECB NEWS & ANALYSIS
FED NEWS & ANALYSIS
About EUR/USD
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EUR/USD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.
Related pairs
GBP/USD
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
USD/JPY
The USD/JPY (or US Dollar Japanese Yen) currency pair is one of the 'Majors', the most important pairs in the world. Japanese Yen has a low interest rate, normally used in carry trades, that's why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.