EUR/USD Forecast: Euro needs to flip 1.0960 into support to extend uptrend
- EUR/USD holds steady at around 1.0950 after posting strong gains in the previous week.
- 1.0960 aligns as intermediate resistance for the pair.
- In the absence of high-tier data releases, souring mood could limit EUR/USD's upside.
EUR/USD touched its highest level since early January above 1.0980 on Friday but reversed its direction later in the American session to close the day with small losses. Nevertheless, the pair gained nearly 1% in the previous week and stabilized slightly below 1.0950 to start the new week.
The data from the US showed on Friday that Nonfarm Payrolls (NFP) rose by 275,000 in February. This reading beat the market expectation of 200,000 but failed to provide a boost to the USD. The Bureau of Labor Statistics (BLS) reported that it revised the January increase of 353,000 lower to 229,000 and said the annual wage inflation, as measured by the changed in the Average Hourly Earnings, edged lower to 4.3% from 4.4% in January. Finally, the Unemployment Rate rose to 3.9% from 3.7%, while the Labor Force Participation held steady at 62.5%.
Euro price in the last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies in the last 7 days. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.89% | -1.46% | -0.48% | -1.29% | -2.19% | -1.17% | -0.77% | |
| EUR | 0.89% | -0.56% | 0.41% | -0.40% | -1.29% | -0.26% | 0.12% | |
| GBP | 1.44% | 0.57% | 0.95% | 0.16% | -0.72% | 0.29% | 0.68% | |
| CAD | 0.47% | -0.40% | -0.97% | -0.80% | -1.71% | -0.68% | -0.29% | |
| AUD | 1.28% | 0.41% | -0.15% | 0.81% | -0.91% | 0.14% | 0.50% | |
| JPY | 2.17% | 1.29% | 0.71% | 1.67% | 0.89% | 1.02% | 1.41% | |
| NZD | 1.14% | 0.26% | -0.31% | 0.66% | -0.14% | -1.03% | 0.38% | |
| CHF | 0.76% | -0.12% | -0.69% | 0.30% | -0.52% | -1.42% | -0.38% |
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 benchmark 10-year US Treasury bond yield declined toward 4% after the February jobs report and caused the US Dollar (USD) to continue to weaken against its rivals. Profit-taking ahead of the weekend, however, helped the currency find a foothold.
The economic calendar will not offer any high-impact macroeconomic data releases on Monday. Hence, investors could keep a close eye on the risk perception.
At the time of press, US stock index futures were down about 0.2%. A bearish opening in Wall Street could allow the USD to hold its ground and make it difficult for EUR/USD to gather bullish momentum.
EUR/USD Technical Analysis
The Fibonacci 61.8% retracement level of the latest downtrend form immediate resistance at 1.0960. In case the pair flips that level into support, 1.1000 (psychological level, static level) could be seen as the next bullish target before 1.1030 (Fibonacci 78.6% retracement).
On the downside, supports are located at 1.0910-1.0900 (Fibonacci 50% retracement, psychological level), 1.0870 (ascending trend line) and 1.0840 (100-period Simple Moving Average (SMA) on the 4-hour chart).
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.
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.
