- EUR/USD slides as German Imports tumble, pan-EU PPI slips further.
- EUR/USD tested into 12-week lows in Monday’s decline.
- German Trade Balance rises on accelerating Import declines.
The EUR/USD fell another half-percent on Monday, dragging the pair into 12-week lows near 1.0723 after EU economic data failed to inspire investor confidence. The OECD sees pan-European inflation holding above the European Central Bank’s (ECB) 2% until sometime after 2025, hampering money market’s expectations for rate cuts from the ECB, further suppressing upside potential in the Euro (EUR).
This week still brings European Retail Sales for December as well as the ECB’s latest Economic Bulletin, with Friday rounding out the economic calendar with Germany’s Harmonized Index of Consumer Prices (HICP) for January.
Daily digest market movers: EUR/USD extends declines as investors look for reasons to buy
- Germany’s Trade Balance rose to €22.2 billion after German Imports tumbled to multi-year lows, declining 6.7% in December versus the forecast -1.5%, engulfing the previous month’s 1.5%.
- Germany’s HCOB Composite Purchasing Manager’s Index (PMI) also slid in January, printing at 47.0 versus the forecast steady hold at 47.1.
- Pan-European Producer Price Index (PPI) figures also declined for the year ended in December, coming in at -10.6% versus the forecast -10.5%, falling even further away from the previous period’s -8.8%.
- Tuesday brings December’s euro area Retail Sales, forecast to tick upwards slightly to -0.9% for the year ended in December versus the previous period’s -1.1%.
- MoM Retail Sales are expected to see accelerated declines of -1.0% compared to the previous month’s -0.3%.
- The ECB drops their latest Economic Bulletin on Thursday, investors will be looking for tonal shifts regarding interest rate cuts from the ECB but hopes are waning.
- Friday rounds out the European economic calendar with Germany’s HICP inflation for January, forecast to hold steady at 3.1%.
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 | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.35% | 0.70% | 0.53% | 0.36% | 0.11% | 0.14% | 0.39% | |
| EUR | -0.35% | 0.36% | 0.18% | 0.01% | -0.24% | -0.20% | 0.04% | |
| GBP | -0.70% | -0.36% | -0.18% | -0.35% | -0.60% | -0.56% | -0.30% | |
| CAD | -0.53% | -0.18% | 0.18% | -0.17% | -0.42% | -0.39% | -0.14% | |
| AUD | -0.36% | -0.01% | 0.35% | 0.17% | -0.25% | -0.22% | 0.03% | |
| JPY | -0.11% | 0.23% | 0.58% | 0.43% | 0.25% | 0.02% | 0.29% | |
| NZD | -0.15% | 0.20% | 0.56% | 0.39% | 0.22% | -0.04% | 0.25% | |
| CHF | -0.41% | -0.06% | 0.29% | 0.11% | -0.05% | -0.30% | -0.27% |
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).
Technical analysis: EUR/USD looking to springboard off chart territory near 1.0720
EUR/USD shed further weight after opening the trading week near 1.0780, dipping into multi-week lows near 1.0720 as the pair accelerates into the bearish side of the 200-hour Simple Moving Average (SMA) descending through 1.0840.
Despite EUR/USD recovering late Monday, the pair remains steeply off of recent consolidation around the 200-day SMA near 1.0850, and the pair is running into old technical support from December’s swing low. EUR/USD is set for a bearish challenge of the 1.0700 handle, while the topside sees technical congestion waiting for buyers as the 200-day and 50-day SMA consolidate near 1.0850 and 1.0900, respectively.
EUR/USD hourly chart
EUR/USD daily chart
Euro FAQs
What is the Euro?
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%).
What is the ECB and how does it impact the Euro?
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.
How does inflation data impact the value of the Euro?
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.
How does economic data influence the value of the Euro?
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.
How does the Trade Balance impact the Euro?
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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