EUR/USD Forecast: Euro faces critical support at 1.0730
- EUR/USD trades in negative territory below 1.0800 on Tuesday.
- 1.0730 aligns as a critical support level for the pair.
- US economic calendar will feature CB Consumer Confidence Index data.
After rising above 1.0850 in the European session on Monday, EUR/USD reversed its direction in the American session and closed the day in negative territory. The pair stays on the back foot early Tuesday and trades below 1.0800.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.10% | -0.08% | 0.03% | -0.01% | 0.20% | 0.08% | |
| EUR | -0.11% | -0.02% | -0.19% | -0.09% | -0.09% | 0.08% | -0.04% | |
| GBP | -0.10% | 0.02% | -0.17% | -0.07% | -0.07% | 0.10% | -0.07% | |
| JPY | 0.08% | 0.19% | 0.17% | 0.10% | 0.11% | 0.27% | 0.14% | |
| CAD | -0.03% | 0.09% | 0.07% | -0.10% | 0.00% | 0.17% | 0.00% | |
| AUD | 0.01% | 0.09% | 0.07% | -0.11% | -0.01% | 0.17% | 0.04% | |
| NZD | -0.20% | -0.08% | -0.10% | -0.27% | -0.17% | -0.17% | -0.16% | |
| CHF | -0.08% | 0.04% | 0.07% | -0.14% | -0.00% | -0.04% | 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 US Dollar (USD) benefited from the upbeat data on Monday and caused EUR/USD to push lower in the second half of the day. S&P Global Composite Purchasing Managers Index (PMI) improved to 53.5 in March's flash estimate from 51.6 in February and showed that the economic activity in the private sector expanded at an accelerating pace.
Early Tuesday, US stock index futures trade in negative territory, reflecting a cautious market mood, which makes it difficult for EUR/USD to hold its ground.
In the second half of the day, the US economic calendar will feature CB Consumer Confidence Index data for March. A noticeable improvement in consumer sentiment could support the USD with the immediate reaction.
Markets will also pay close attention to headlines coming out of Russia-Ukraine talks. "Russia and the US are reportedly due to issue a statement today about the progress of negotiations. Indications that some agreement is building around a full ceasefire would support European sentiment and the euro," said ING FX analyst Francesco Pesole.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays below 40 and last four 4-hour candles closed below the 100-period Simple Moving Average (SMA), reflecting a buildup of bearish momentum in EUR/USD.
On the downside, 1.0760 (20-day SMA) aligns as interim support beforahead of 1.0730 (200-day SMA). A daily close below the latter could attract technical sellers and open the door for another leg lower toward 1.0630 (static level, 200-period SMA).
Looking north, first resistance could be spotted at 1.0820 (100-period SMA) before 1.0850 (static level) and 1.0900 (static level, round level).
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.
