EUR/USD edges up from lows ahead of the US GDP, PCE Inflation figures
|- EUR/USD attempts to regain 1.1700 after bouncing from Wednesday's lows at 1.1670.
- Trump's Davos speech, with a softer tone towards Europe, has eased the "Sell America" trade.
- The US PCE Prices Index and the GDP figures might drive the US Dollar later on Thursday.
EUR/USD posts marginal gains on Thursday, trading at 1.1695 at the time of writing, after bouncing from lows at the 1.1670 area. The common currency extended its reversal from 1.1770 highs on Wednesday, as US President Donald Trump toned down his threats against its European partners at the World Economic Forum in Davos, triggering a relief rally and allowing the U.S. dollar to regain some of the ground lost earlier this week.
Trump stepped back on his threat to impose tariffs on European countries opposing his plans to annex Greenland and ruled out military action to take the island. Later on, he announced the framework of a deal with NATO on his social media account. The US president did not provide any details of the agreement, but the announcement helped ease tensions with Europe.
As some calm returns to the markets, investors will shift their focus back to the macroeconomic data domain, where the US Personal Consumption Expenditures (PCE) Price Index and the Q3 Gross Domestic Product (GDP) figures might provide further insight into the path of the US Federal Reserve's (Fed) monetary policy.
In Europe, the European Central Bank's (ECB) Monetary Policy Meeting Accounts and the German Bundesbank Monthly Report might provide some guidance to the Euro on Thursday.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | 0.00% | 0.21% | -0.06% | -0.62% | -0.50% | -0.28% | |
| EUR | 0.07% | 0.09% | 0.26% | 0.02% | -0.54% | -0.43% | -0.20% | |
| GBP | -0.00% | -0.09% | 0.15% | -0.07% | -0.63% | -0.51% | -0.29% | |
| JPY | -0.21% | -0.26% | -0.15% | -0.24% | -0.79% | -0.70% | -0.46% | |
| CAD | 0.06% | -0.02% | 0.07% | 0.24% | -0.55% | -0.44% | -0.22% | |
| AUD | 0.62% | 0.54% | 0.63% | 0.79% | 0.55% | 0.13% | 0.33% | |
| NZD | 0.50% | 0.43% | 0.51% | 0.70% | 0.44% | -0.13% | 0.22% | |
| CHF | 0.28% | 0.20% | 0.29% | 0.46% | 0.22% | -0.33% | -0.22% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily Digest Market Movers: US Dollar bounces up as Trump eases tensions with Europe
- Trump has taken off the table the option of a military confrontation between NATO members and the threat of additional tariffs on EU countries, and the market has sighed with relief. The US Dollar has regained some ground lost in previous days, and the Euro has pulled back.
- The transatlantic relationship is still far from its best moment, though. ECB President Christine Lagarde walked out abruptly of an invitation-only dinner – hosted by BlackRock CEO Larry Fink at Davos – after US Commerce Secretary Howard Lutnick criticized the European Union during a speech.
- The focus on Thursday is on the release of the delayed US Personal Consumption Expenditures Price Indexes for October and November. PCE inflation is expected to have remained at growing levels significantly above the Fed's 2% target in November.
- At the same time, the US Bureau of Economic Analysis will release the final reading of the Q3 GDP, which is expected to confirm that economic growth accelerated to 4.3% annualized, from 3.8% in the previous quarter. All in all, data reflecting healthy growth and sticky inflation levels, adding to the case of a Fed monetary pause.
Technical Analysis: EUR/USD recovery might find resistance at 1.1710
The EUR/USD recovery was capped at 1.1770, and the pair is now looking for direction, halfway through the recent range. The Moving Average Convergence Divergence (MACD) has turned marginally negative on the 4-hour chart, and the MACD line is attempting to cross below the signal line, a bearish sign. The Relative Strength Index (RSI) holds right above 50, showing a neutral level.
Bears have been contained at Wednesday's low of 1.1670, but the pair is struggling to bounce up. A break of that level would increase bearish pressure towards the intraday support in the area of 1.1630. To the upside, previous support at 1.1710 (intraday level) might offer some resistance ahead of the January 2 and 20 highs, in the area of 1.1770
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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