- EUR/USD consolidates amid market optimism ahead of US PPI.
- Euro gained ground on Thursday as the US Dollar declined after disappointing Retail Sales data.
- ECB’s Villeroy stated that there are several reasons for not waiting too long before the first rate cut.
- US Retail Sales (MoM) declined 0.8% in January compared to the expected 0.1% decline.
The EUR/USD pair struggles to extend its gains, hovering above 1.0770 on Friday. However, the market optimism supported the US Dollar (USD) against the Euro (EUR) ahead of key data events, particularly the Producer Price Index (PPI) and Michigan Consumer Sentiment Index from the United States (US) scheduled to be released on Friday.
European Central Bank (ECB) Governing Council member Francois Villeroy de Galhau mentioned that there are several reasons why they should not wait too long before the first rate cut. While the idea of a rate cut this year appears likely, the exact timing is still under consideration. There's ample room for adjusting rates without immediately resorting to an accommodative monetary policy.
The US Dollar Index (DXY) attempts to retrace its recent losses on the back of higher US Treasury yields. The market sentiment is biased to the idea that the US Federal Reserve (Fed) will avoid rate cuts in March and May. The CME FedWatch Tool shows a 52% likelihood of a 25 basis points (bps) rate cut in June. The disappointing US Retail Sales data on Thursday contributed downward pressure to undermining the US Dollar, which in turn, acted as a tailwind for the EUR/USD pair.
Daily digest market movers: EUR/USD moves sideways amid a stable US Dollar
- The US Dollar Index trades around 104.30, with the 2-year and 10-year US Treasury yields standing higher at 4.62% and 4.27%, respectively, at the time of writing.
- Federal Reserve Bank of Atlanta President Raphael W. Bostic seeks further improvement in inflation, but it could be bumpy. He mentioned that if inflation retreats faster, it could prompt a reassessment of his stance on the outlook for interest rates.
- US Retail Sales showed that consumer spending decreased by 0.8% MoM in January against the market prediction of a 0.1% decline following the previous increase of 0.4%.
- US January’s Retail Sales Control Group declined by 0.4% compared to the previous increase of 0.6%.
- US Initial Jobless Claims reduced to a figure of 212K for the week ending February 9 from the previous reading of 220K. Claims were expected to be unchanged.
- US Industrial Production (MoM) contracted by 0.1% in January, against the expected 0.3% improvement from a flat 0.0% prior.
- Christine Lagarde, the President of the European Central Bank (ECB), stated that recent data indicates ongoing subdued economic activity in the near term. While the current disinflationary trend is anticipated to persist, Lagarde emphasized the importance of ensuring confidence that this trajectory will ultimately lead to the sustainable achievement of the ECB's 2% inflation target.
- The preliminary Eurozone Gross Domestic Product (GDP) seasonally adjusted grew by 0.1% year-over-year in the fourth quarter, as expected. The GDP quarter-over-quarter remained flat at 0.0%.
- Germany’s Wholesale Price Index (YoY) declined by 2.7% YoY in January from the previous 2.6% fall. The month-over-month index increased by 0.1% from the previous decline of 0.6%.
Technical Analysis: EUR/USD hovers above 1.0770 below 38.2% Fibonacci retracement
EUR/USD trades near 1.0770 on Friday, which is located below the immediate resistance level at 38.2% Fibonacci retracement of the 1.0897-1.0695 downward move at 1.0772. A break above this level could lead the pair to test the 50.0% retracement level at 1.0796 aligned with the psychological resistance at 1.0800 level.
On the downside, the EUR/USD pair could find the key support around the nine-4hour Exponential Moving Average (EMA) at 1.0755 in conjunction with the major support at 1.0750 level. A break below this level could push the pair to navigate the support region around the psychological level of 1.0700 in line with February’s low at 1.0694.
In technical analysis, the EUR/USD pair shows a 14-4hour Relative Strength Index (RSI) above the 50 mark, signaling a bullish sentiment. Additionally, the Moving Average Convergence Divergence (MACD) is positioned above the centerline and the signal line, indicating a confirmation of the bullish momentum.
EUR/USD: Four-Hour Chart
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.02% | 0.06% | 0.08% | -0.03% | 0.17% | 0.04% | 0.10% | |
| EUR | 0.00% | 0.06% | 0.09% | -0.02% | 0.18% | 0.06% | 0.11% | |
| GBP | -0.07% | -0.08% | 0.01% | -0.09% | 0.11% | -0.01% | 0.04% | |
| CAD | -0.08% | -0.09% | -0.01% | -0.09% | 0.10% | -0.04% | 0.02% | |
| AUD | 0.03% | 0.01% | 0.10% | 0.12% | 0.21% | 0.09% | 0.14% | |
| JPY | -0.17% | -0.18% | -0.09% | -0.10% | -0.22% | -0.12% | -0.06% | |
| NZD | -0.05% | -0.06% | 0.02% | 0.04% | -0.07% | 0.13% | 0.05% | |
| CHF | -0.11% | -0.11% | -0.04% | -0.02% | -0.13% | 0.07% | -0.06% |
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).
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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