EUR/USD Forecast: Euro stays between key technical levels ahead of Easter holiday
- EUR/USD edged lower toward 1.0800 in the early European session on Thursday.
- The cautious market mood helps the USD hold its ground ahead of data releases.
- Fed Governor Christopher Waller said that they are in no rush to cut the policy rate.
EUR/USD came under modest bearish pressure and declined toward 1.0800 in the early European session on Thursday. The near-term technical outlook suggests that the bearish bias stays intact but the pair's action could remain subdued heading into the Easter holiday.
Although the improving risk sentiment made it difficult for the US Dollar (USD) to find demand on Wednesday, hawkish comments from Federal Reserve Governor Christopher Waller helped the currency stay resilient against its rivals and limited EUR/USD's upside.
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.10% | 0.00% | 0.04% | 0.18% | 0.07% | 0.19% | 0.06% | |
| EUR | -0.10% | -0.09% | -0.03% | 0.10% | -0.03% | 0.10% | -0.03% | |
| GBP | -0.01% | 0.09% | 0.05% | 0.19% | 0.05% | 0.19% | 0.07% | |
| CAD | -0.05% | 0.04% | -0.05% | 0.13% | 0.02% | 0.14% | 0.01% | |
| AUD | -0.18% | -0.10% | -0.18% | -0.14% | -0.11% | -0.01% | -0.12% | |
| JPY | -0.06% | 0.05% | -0.06% | 0.00% | 0.14% | 0.13% | -0.02% | |
| NZD | -0.20% | -0.09% | -0.19% | -0.14% | -0.01% | -0.09% | -0.12% | |
| CHF | -0.07% | 0.03% | -0.06% | -0.01% | 0.12% | 0.03% | 0.13% |
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).
Waller said that the Fed is not in a rush to lower the policy rate following the latest inflation data and argued that the US central bank may need to maintain the current interest rate for longer than expected.
Meanwhile, the data from Germany showed early Thursday that Retail Sales declined by 1.9% on a monthly basis in February. This reading followed the 0.4% contraction recorded in January and came in worse than the market expectation for an increase of 0.3%, making it difficult for the Euro to gather strength.
In the second half of the day, weekly Initial Jobless Claims data will be featured in the US economic docket alongside the Pending Home Sales data for February. The US Bureau of Economic Analysis will release the final revision to the fourth-quarter real Gross Domestic Product growth as well. In case the weekly Initial Jobless Claims decline toward, or below, 200K, the initial reaction could help the USD outperform its rivals.
Market participants could also look to adjust positions on the last trading day of the first quarter, triggering some disorderly movements in the second half of the day.
EUR/USD Technical Analysis
In case EUR/USD drops below 1.0800 (Fibonacci 61.8% retracement of the latest uptrend) and starts using this level as resistance, additional losses toward 1.0760 (Fibonacci 78.6% retracement) and 1.0700 (beginning point of the uptrend) could be seen.
On the upside, the 200-period Simple Moving Average (SMA) forms dynamic resistance at 1.0840 before 1.0860 (Fibonacci 38.2% retracement) and 1.0885 (100-period SMA).
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.
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.
