EUR/USD Forecast: Euro buyers remain hopeful ahead of Trump's inauguration
- EUR/USD clings to daily gains above 1.0300 heading into the American session.
- The technical picture highlights a buildup of bullish momentum in the near term.
- Investors await comments from Donald Trump at the inauguration ceremony.
EUR/USD started the week on a firm footing and climbed above 1.0300. The upbeat market mood makes it difficult for the US Dollar (USD) to stay resilient against its rivals and allows the pair to continue to stretch higher.
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 | -0.44% | -0.25% | 0.09% | -0.05% | -0.24% | -0.25% | 0.08% | |
| EUR | 0.44% | 0.14% | 0.44% | 0.28% | 0.26% | 0.08% | 0.40% | |
| GBP | 0.25% | -0.14% | 0.25% | 0.13% | 0.13% | -0.06% | 0.26% | |
| JPY | -0.09% | -0.44% | -0.25% | -0.14% | -0.30% | -0.45% | -0.19% | |
| CAD | 0.05% | -0.28% | -0.13% | 0.14% | -0.13% | -0.20% | 0.12% | |
| AUD | 0.24% | -0.26% | -0.13% | 0.30% | 0.13% | -0.27% | 0.07% | |
| NZD | 0.25% | -0.08% | 0.06% | 0.45% | 0.20% | 0.27% | 0.14% | |
| CHF | -0.08% | -0.40% | -0.26% | 0.19% | -0.12% | -0.07% | -0.14% |
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).
Stock and bond markets in the United States (US) will be closed in observance of the Martin Luther King Jr. Day holiday on Monday. Hence, EUR/USD's action could remain subdued in the first half of the American session. Later in the day, Donald Trump will deliver a speech at his inauguration ceremony.
Investors remain optimistic about Trump's refraining from introducing an aggressive tariff policy right away. On his call with Chinese President Xi Jinping, Trump said: "It is my expectation that we will solve many problems together, and starting immediately."
Earlier in the day, the data from Germany showed that the Producer Price Index (PPI) declined by 0.1% on a monthly basis in December, against the market expectation for an increase of 0.3%. This data, however, failed to trigger a noticeable market reaction.
On Tuesday, the ZEW Survey - Economic Sentiment for the Euro area and Germany will be scrutinized by investors.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 60, reflecting a buildup of bullish momentum. At the time of press, EUR/USD was trading at around 1.0325, where the 100-period Simple Moving Average (SMA) is located. Once the pair rises above this level and confirms it as support, technical buyers could remain interested. In this scenario, 1.0390-1.0400 (Fibonacci 50% retracement of the latest downtrend, 200-period SMA) could be seen as the next bullish target before 1.0440 (Fibonacci 61.8% retracement).
On the downside, first support could be spotted at 1.0290-1.0300 (50-period SMA; 20-period SMA, Fibonacci 23.6% retracement) ahead of 1.0250 (static level) and 1.0200 (end-point of the downtrend).
Euro FAQs
The Euro is the currency for the 19 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.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
