EUR/USD Forecast: Euro bounces up as Trump-Powell feud resumes
- EUR/USD rallies to levels past 1.1680 after bouncing from one-month lows near 1.1620.
- The US Dollar tumbled on news that the US Government opened a criminal probe against Fed Chairman Powell.
- Rising tensions in Iran are underpinning safe-haven demand on Monday.
EUR/USD jumped to levels above 1.1680 after bouncing from one-month lows near 1.1620 during the Asian session on Monday. The US Dollar (USD) depreciates across the board following news that the US government is attempting to initiate a criminal investigation into Federal Reserve (Fed) Chairman Jerome Powell.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.41% | -0.29% | 0.00% | -0.24% | -0.24% | -0.36% | -0.52% | |
| EUR | 0.41% | 0.12% | 0.39% | 0.17% | 0.18% | 0.05% | -0.11% | |
| GBP | 0.29% | -0.12% | 0.25% | 0.05% | 0.05% | -0.07% | -0.23% | |
| JPY | 0.00% | -0.39% | -0.25% | -0.22% | -0.23% | -0.34% | -0.50% | |
| CAD | 0.24% | -0.17% | -0.05% | 0.22% | 0.00% | -0.12% | -0.28% | |
| AUD | 0.24% | -0.18% | -0.05% | 0.23% | -0.00% | -0.12% | -0.28% | |
| NZD | 0.36% | -0.05% | 0.07% | 0.34% | 0.12% | 0.12% | -0.16% | |
| CHF | 0.52% | 0.11% | 0.23% | 0.50% | 0.28% | 0.28% | 0.16% |
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).
The New York Times reported that Powell is under criminal investigation over testimony he gave to the Senate Committee regarding renovations to a Federal Reserve building. Powell has responded with a video, saying that the investigation is “unprecedented” and another “pretext” to twist the Fed’s arm into lowering interest rates.
The US Dollar has lost ground against most majors, despite rising demand for safe havens, amid growing tensions in Iran. News has reported that Tehran’s response to the protests in the country has caused hundreds of deaths, with the US threat against the Islamic regime looming.
In the macroeconomic calendar, the Eurozone Sentix Economic Sentiment Index and the speech of Atlanta Fed president Raphael Bostic will attract attention on Monday. Investors, however, will keep an eye on Tuesday’s US Consumer Prices Index data for further insight into the Fed’s rate cut calendar.
EUR/USD Technical Analysis
EUR/USD trades at 1.1678 at the time of writing, about 0.35% up on the day so far. Technical indicators in 4-Hour charts have turned higher. The Moving Average Convergence Divergence (MACD) line has crossed above the signal line, hinting at a fading bearish pressure, while the Relative Strength Index (RSI) is trying to breach the key 50 level, signaling some momentum improvement.
On the upside, the top of the descending channel from late-December highs meets the January 7 high near 1.1700. Above here, the target is the January 6 high, at 1.1742. To the downside, the pair has a significant support above 1.1615 (December 8 and 9 lows) ahead of the December 2 low, near 1.1590.
(The technical analysis of this story was written with the help of an AI tool)
(This story was corrected on January 12 at 08:35 GMT to say that the EUR/USD January 7 high is near 1.1700, and not 1.1799 as previously reported.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can 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 does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
