EUR/USD drifts lower, US Dollar ticks up as market sentiment sours
- EUR/USD extends losses and nears one-month lows, at 1.1660.
- Eurozone Unemployment dropped, and producer prices rose in November.
- Markets are on a wait-and-see stance ahead of Friday's US NFP report.
EUR/USD posts moderate lows on Thursday, trading at 1.1673 at the time of writing, approaching four-month lows, at the 1.1660 area. A mild risk aversion is buoying the US Dollar, while the unexpected decline in the Eurozone's unemployment and a string of somewhat brighter economic sentiment indicators have failed to support the Euro.
On Wednesday, a set of mixed US data failed to provide any particular hint on the US Federal Reserve's (Fed) monetary policy path. Employment-related data confirmed that the labour market remains stalled, but an upbeat services sector report pointed to a significant economic recovery in the last quarter of 2025.
Later on Thursday's the US weekly Jobless Claims and Nonfarm Productivity figures might provide some fundamental guidance for the US Dollar, although investors are likely to remain looking from the sidelines, awaiting the release of December's Nonfarm Payrolls report on Friday.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.06% | 0.17% | -0.05% | 0.08% | 0.36% | 0.40% | 0.01% | |
| EUR | -0.06% | 0.11% | -0.09% | 0.03% | 0.30% | 0.36% | -0.05% | |
| GBP | -0.17% | -0.11% | -0.19% | -0.09% | 0.19% | 0.25% | -0.16% | |
| JPY | 0.05% | 0.09% | 0.19% | 0.11% | 0.40% | 0.43% | 0.04% | |
| CAD | -0.08% | -0.03% | 0.09% | -0.11% | 0.29% | 0.33% | -0.07% | |
| AUD | -0.36% | -0.30% | -0.19% | -0.40% | -0.29% | 0.06% | -0.35% | |
| NZD | -0.40% | -0.36% | -0.25% | -0.43% | -0.33% | -0.06% | -0.41% | |
| CHF | -0.01% | 0.05% | 0.16% | -0.04% | 0.07% | 0.35% | 0.41% |
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).
Daily Digest Market Movers: Euro, unimpressed by bright Eurozone data
- Eurozone data beat expectations on Thursday, especially the Unemployment rate, which dropped to 6.3% in November, from 6.4% in October, against market expectations of a steady reading.
- Apart from that, the Producer Prices Index (PPI) accelerated to 0.5% from 0.1% in October, beyond market expectations of a 0.2% increase. Year-on-year, producer prices contracted at a 1.7% pace from -0.5% in October, but still at a slower pace than the -1.9% forecasted by market analysts.
- The economic sentiment indicators released by the European Commission have also beaten expectations in most cases. The Consumer Confidence has risen to -13.1 in December from -14.6 in November, Business Climate improved to -0.56 from -0.66, and Industrial Sentiment ticked up to -9 from -9.3 in the previous month.
- Earlier in the day, data from Germany showed that the country's Factory Orders rose 5.6% in November, after the 1.6% growth seen in October, beating expectations of a 1% drop. Year on Year, orders bounced up 10.5% in November following a 0.7% drop in October.
- US data released on Wednesday failed to provide any further insight into the Fed's near-term monetary policy. The ADP Employment report showed a lower-than-expected increase in net jobs in December, 41K against the market consensus of 47K, while November's decline was revised down to -29K from the -32K previously estimated.
- Job openings failed to improve the outlook of the labour market. November's JOLTS report revealed that vacancies dropped to 7.1 million in November, below the 7.6 million anticipated by market analysts, and also below the upwardly revised 7.449 million openings seen in October.
- Later on Thursday, the US weekly Jobless Claims are expected to have increased to 210,000 in the last week of December from 199,000 in the previous week. The impact of these figures, however, is likely to be limited with the all-important Nonfarm Payrolls report around the corner.
Technical Analysis: EUR/USD is on a bearish correction from 1.1808
The EUR/USD bearish trend from December highs of 1.1808 remains in play, with support at the 1.1660 area holding bears for now. Technical indicators in the 4-hour chart are mildly negative. The 4-hour Moving Average Convergence Divergence (MACD) histogram bars are moving around the zero level, suggesting a lack of momentum, while the Relative Strength Index (RSI) flatlined below the 40 level.
The January 5 low of 1.1659 is closing the path towards the December 8 and 9 lows, in the area of 1.1615. Upside attempts, on the contrary, remain capped below Wednesday's high, near 1.1700. Further up, the descending trendline from December highs, now at 1.1725, and Tuesday's high, at 1.1740, are the next targets.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off'' refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
Author
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
