EUR/USD Forecast: Euro opens with a bullish gap ahead of US presidential election
- EUR/USD started the new week higher and climbed to the 1.0900 area.
- The US Dollar stays under pressure as markets gear up for the presidential election.
- The pair's technical outlook points to a bullish tilt in the near term.
EUR/USD opened with a bullish gap and advanced to the 1.0900 area to start the new week, with the US Dollar (USD) coming under heavy selling pressure heading into the presidential election.
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 | -0.54% | -0.49% | 0.06% | -0.06% | -0.50% | -0.11% | -0.26% | |
| EUR | 0.54% | 0.00% | 0.18% | 0.07% | 0.34% | 0.03% | -0.11% | |
| GBP | 0.49% | -0.01% | -0.08% | 0.06% | 0.34% | 0.02% | -0.12% | |
| JPY | -0.06% | -0.18% | 0.08% | -0.12% | 0.00% | 0.05% | 0.00% | |
| CAD | 0.06% | -0.07% | -0.06% | 0.12% | -0.22% | -0.05% | -0.19% | |
| AUD | 0.50% | -0.34% | -0.34% | -0.01% | 0.22% | -0.31% | -0.46% | |
| NZD | 0.11% | -0.03% | -0.02% | -0.05% | 0.05% | 0.31% | -0.15% | |
| CHF | 0.26% | 0.11% | 0.12% | -0.00% | 0.19% | 0.46% | 0.15% |
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).
Changes in betting odds for the winner of the presidential election over the weekend triggered a USD selloff. PredictIt has placed a 51% possibility of a Kamala Harris winning on Tuesday, marking the vice president's first lead over Donald Trump on the site since October 9. Meanwhile, the disappointing labor market data could also be putting additional weight on the USD's shoulders, even though the immediate market reaction was mixed on Friday.
The US Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) in the US rose by only 12,000 in October, down from the 223,000 increase (revised from 254,000) recorded in September and much worse than the market expectation of 113,000. In its press releases, the BLS noted that it was likely that payroll employment estimates in some industries were affected by the hurricanes.
Factory Orders for September will be the only data featured in the US economic docket on Monday, which is unlikely to trigger a market reaction.
Investors will keep a close eye on changes in betting odds and latest poll results. At this point, it could be risky to take a directional position in EUR/USD.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays above 60 and EUR/USD holds comfortably above the 200-day Simple Moving Average (SMA), currently located at 1.0870, despite having closed the previous week below this level.
EUR/USD was last seen trading near 1.0900. Once the pair rises above this level and starts using it as support, 1.0950 (100-day SMA) could be seen as next resistance before 1.1000 (round level, static level, 50-day SMA). On the downside, a daily close below 1.0870 could discourage buyers and open the door for an extended slide toward 1.0800 (round level, static 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.
