- EUR/USD retreated below 1.0850 following Tuesday's recovery attempt.
- The technical outlook highlights the lack of buyer interest.
- The pair's action could remain subdued in the absence of high-tier data releases.
EUR/USD turned south and erased its daily gains after rising above 1.0850 on Tuesday. The pair struggles to gather directional momentum early Wednesday as investors continue to search for a fresh catalyst.
The modest improvement seen in risk mood made it difficult for the US Dollar (USD) to find demand in the first half of the day. As Wall Street's main indexes retreated into the negative territory after opening higher, however, the USD found a foothold.
Euro price this week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.18% | -0.23% | -0.13% | -0.23% | 0.27% | -0.24% | 0.80% | |
| EUR | 0.19% | -0.07% | 0.05% | -0.04% | 0.45% | 0.00% | 0.98% | |
| GBP | 0.25% | 0.05% | 0.09% | 0.03% | 0.42% | 0.05% | 1.02% | |
| CAD | 0.12% | -0.10% | -0.10% | -0.08% | 0.38% | -0.07% | 0.94% | |
| AUD | 0.21% | 0.02% | -0.01% | 0.08% | 0.46% | -0.03% | 1.01% | |
| JPY | -0.27% | -0.48% | -0.39% | -0.38% | -0.48% | -0.48% | 0.52% | |
| NZD | 0.20% | 0.07% | 0.03% | 0.12% | 0.03% | 0.50% | 1.05% | |
| CHF | -0.78% | -0.98% | -1.03% | -0.93% | -1.03% | -0.63% | -0.98% |
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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The data from the US showed that Durable Goods Orders rose 1.4% in February following the 6.9% contraction recorded in January. This reading came in slightly higher than the market expectation for an increase of 1.3% and further supported the USD.
The European Commission will release business and consumer sentiment data for March later in the session, which are unlikely to trigger a noticeable market reaction. The US economic calendar will not offer any high-tier data releases later in the day. Meanwhile, US stock index futures trade modestly higher early Wednesday. In case the market mood improves in the American trading hours, the USD could struggle to gather strength and help EUR/USD stretch higher.
EUR/USD Technical Analysis
EUR/USD returned below the 200-period Simple Moving Average (SMA) on the 4-hour chart and the Relative Strength Index (RSI) indicator declined toward 40, reflecting the lack of buyer interest.
On the downside, 1.0800 (Fibonacci 61.8% retracement of the latest uptrend) aligns as first support ahead of 1.0760 (Fibonacci 78.6% retracement). Resistance are located at 1.0840 (200-period SMA), 1.0860 (Fibonacci 38.2% retracement) and 1.0885 (100-period SMA).
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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