- EUR/USD continues to fluctuate in a narrow channel near 1.0900.
- Disappointing sentiment data from Germany limits the pair's upside.
- June Retail Sales data will be featured in the US economic docket.
EUR/USD moves up and down in a tight band at around 1.0900 in the European trading hours on Tuesday after closing the first trading day of the week virtually unchanged. The pair's near term technical outlook suggests that the bullish bias remains intact.
Euro PRICE Last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.70% | -1.19% | -1.49% | 0.32% | -0.09% | 1.07% | -0.24% | |
| EUR | 0.70% | -0.51% | -0.78% | 1.01% | 0.62% | 1.78% | 0.46% | |
| GBP | 1.19% | 0.51% | -0.29% | 1.52% | 1.15% | 2.30% | 0.96% | |
| JPY | 1.49% | 0.78% | 0.29% | 1.82% | 1.40% | 2.56% | 1.24% | |
| CAD | -0.32% | -1.01% | -1.52% | -1.82% | -0.42% | 0.76% | -0.57% | |
| AUD | 0.09% | -0.62% | -1.15% | -1.40% | 0.42% | 1.14% | -0.18% | |
| NZD | -1.07% | -1.78% | -2.30% | -2.56% | -0.76% | -1.14% | -1.30% | |
| CHF | 0.24% | -0.46% | -0.96% | -1.24% | 0.57% | 0.18% | 1.30% |
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).
While speaking at the Economic Club of Washington on Monday, Federal Reserve (Fed) Chairman Jerome Powell said that they will continue to make policy decisions on a meeting-by-meeting basis, while acknowledging that the last three readings in the second quarter added to their confidence in inflation falling. With markets already fully pricing in a Fed rate cut in September, these remarks failed to trigger a noticeable market reaction.
On Tuesday, the data from Germany showed that the ZEW Survey - Economic Sentiment declined sharply to 41.8 in July from 47.5 in June, making it difficult for the Euro to gather strength. According to ZEW, the political uncertainty in France and the lack of clarity regarding the future monetary policy by the European Central Bank (ECB) have contributed to Germany's economic outlook worsening.
Later in the day, June Retail Sales data will be featured in the US economic docket. Markets expect Retail Sales to remain unchanged following the modest 0.1% growth recorded in May. The market reaction to this data could be straightforward and remain short-lived, with a positive surprise supporting the US Dollar and a negative print hurting the currency.
EUR/USD Technical Analysis
EUR/USD remains within the ascending regression channel coming from late June and the Relative Strength Index (RSI) indicator on the 4-hour chart stays above 60, suggesting that the bullish bias remains intact.
On the upside, 1.0900 (psychological level, static level, mid-point of the ascending channel) aligns as key pivot level. Once EUR/USD confirms that level as support, 1.0950 (upper limit of the ascending channel) could be seen as next resistance before 1.1000 (psychological level, static level).
If EUR/USD fails to stabilize above 1.0900, buyers could get discouraged. In this scenario, 1.0870 (lower limit of the ascending channel) could be seen as first support before 1.0845 (50-period Simple Moving Average) and 1.0800 (psychological level, static level).
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.
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