• EUR/USD recovered toward 1.0650 in the European session on Friday.
  • Investors could stay away from risk-sensitive assets ahead of the weekend.
  • Geopolitical headlines could continue to drive the action in financial markets.

EUR/USD declined toward 1.0600 in the early Asian session on Friday but managed to recover to the 1.0650 area. In the absence of high-tier data releases, investors will keep a close eye on headlines surrounding the Iran-Israel conflict.

Reports of Israeli missiles striking Iran triggered a flight to safety in the early trading hours of the Asian session on Friday. In turn, the US Dollar (USD) benefited from safe-haven flows and forced EUR/USD to turn south.

Euro price today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Swiss Franc.

  USD EUR GBP CAD AUD JPY NZD CHF
USD   -0.07% -0.08% -0.08% 0.11% -0.10% 0.18% -0.43%
EUR 0.07%   -0.01% -0.01% 0.18% -0.01% 0.24% -0.36%
GBP 0.08% 0.01%   0.00% 0.19% 0.00% 0.26% -0.36%
CAD 0.08% 0.01% -0.01%   0.19% 0.00% 0.25% -0.36%
AUD -0.11% -0.18% -0.19% -0.20%   -0.19% 0.06% -0.55%
JPY 0.08% 0.03% 0.00% 0.00% 0.23%   0.25% -0.35%
NZD -0.18% -0.24% -0.25% -0.25% -0.06% -0.27%   -0.61%
CHF 0.42% 0.37% 0.36% 0.36% 0.55% 0.35% 0.61%  

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).

 

Israel has not yet officially confirmed that they carried out a retaliatory attack against Iran, but several news outlets reported that US officials said that Israel was behind the strikes.

According to the CNN, a regional intelligence source said that direct state-to-state strikes between Israel and Iran were over. These latest headlines seem to be allowing markets to breathe a sigh of relief. Reflecting the improvement in risk mood, S&P 500 futures, which were over 1.5% earlier in the day, retraced a large portion of its daily losses.

Nevertheless, the geopolitical uncertainty in the region could cause investors to seek refuge ahead of the weekend. At the least, they could refrain from making risky bets even if geopolitical tensions don't escalate any further.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart recovered toward 50, reflecting a loss of bearish momentum. On the upside, 1.0700 (50-period Simple Moving Average (SMA), static level) aligns as first resistance before 1.0730 (static level) and 1.0750 (100-period SMA).

Supports are located at 1.0600 (psychological level, static level) before 1.0530 (static level from November).

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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