EUR/USD Forecast: Euro stabilizes ahead of next batch of US data
- EUR/USD stays in a narrow channel at around 1.1650 early Thursday.
- The near-term technical outlook highlights the pair's indecisiveness.
- Upcoming data releases from the US could influence EUR/USD's action in the American session.
EUR/USD fluctuates at around 1.1650 in the European session after posting marginal gains on Wednesday. The pair's technical outlook points to a neutral stance in the near term but upcoming macroeconomic data releases from the US could drive the pair's action in the second half of the day.
Euro Price This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.38% | 0.33% | 0.84% | 0.56% | 0.32% | 0.40% | 0.65% | |
| EUR | -0.38% | -0.05% | 0.41% | 0.17% | -0.08% | 0.02% | 0.26% | |
| GBP | -0.33% | 0.05% | 0.36% | 0.22% | -0.03% | 0.07% | 0.36% | |
| JPY | -0.84% | -0.41% | -0.36% | -0.24% | -0.52% | -0.42% | -0.18% | |
| CAD | -0.56% | -0.17% | -0.22% | 0.24% | -0.22% | -0.15% | 0.14% | |
| AUD | -0.32% | 0.08% | 0.03% | 0.52% | 0.22% | 0.10% | 0.39% | |
| NZD | -0.40% | -0.02% | -0.07% | 0.42% | 0.15% | -0.10% | 0.29% | |
| CHF | -0.65% | -0.26% | -0.36% | 0.18% | -0.14% | -0.39% | -0.29% |
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 Bureau of Labor Statistics (BLS) reported on Wednesday that JOLTS Job Openings declined to 7.18 million in July from 7.35 million in June. This print came in worse than the market expectation of 7.4 million and caused the US Dollar (USD) to weaken with the immediate reaction. In turn, EUR/USD edged higher to end the day in positive territory.
Later in the day, ADP Employment Change and the Institute for Supply Management's (ISM) Services Purchasing Managers' Index (PMI) data for August will be featured in the US economic calendar.
Markets expect employment in the private sector to rise by 65,000 in August following the 104,000 increase recorded in July. A negative surprise, with a print below 50,000, could weigh on the USD in the early American session and help EUR/USD regain its traction. On the other hand, a reading above 75,000 could weigh on the pair.
Investors will also pay close attention to the Employment Index of the ISM Services PMI report, if the headline PMI stays above 50 as anticipated. In case the employment component of the survey recovers above 50 and highlights an increase in the service sector payrolls, the USD is likely to gather strength and trigger another leg lower in EUR/USD.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart moves sideways slightly below 50 and EUR/USD fluctuates at around the 20-day and the 50-day Simple Moving Averages (SMA), currently located in the 1.1650-1.1660 region, highlighting a neutral stance.
On the downside, the first support level could be seen at 1.1640 (200-period SMA) ahead of 1.1600 (static level, round level) and 1.1540 (static level). In case EUR/USD manages to clear 1.1650-1.1660 area and confirms that level as support, 1.1700 (round level, static level) could be seen as the next resistance level before 1.1740 (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.
Premium
You have reached your limit of 3 free articles for this month.
Start your subscription and get access to all our original articles.
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.
