EUR/USD pares losses and extends from 1.0700 after US Retail Sales miss the mark
- US Retail Sales missed the mark on Thursday, driving down the US Dollar.
- The Euro caught a leg up, putting more distance above the 1.0700 handle.
- Friday wraps up the trading week with US PPI figures, Michigan sentiment survey.
EUR/USD gained ground on Thursday, extending a rebound from the 1.0700 handle after the pair flubbed technical levels earlier in the week. The European Commission revised down its Economic Growth Forecasts, and US Retail Sales showed an unexpected contraction in consumer spending activity.
Daily digest market movers: EUR/USD pares recent losses as investors pivot on US Dollar
- US Retail Sales shrank 0.8% MoM in January, well below the -0.1% forecast compared to the previous month’s 0.4% (revised down from 0.6%).
- US Core Retail Sales (excluding Automobiles) also declined 0.6% in January, reversing the forecast 0.2% uptick compared to December’s 0.6% (revised 0.8%).
- Investors hungry for rate cuts from the Federal Reserver (Fed) dog-piled on the US data miss, as a softening US economic landscape increases odds of a Fed rate trim.
- US Initial Jobless Claims came in below expectations, printing at 212K for the week ended February 9 versus the forecast 220K.
- The previous week’s Initial Jobless Claims also saw a revision to 220K from 218K.
- The European Commission lowered economic growth projections for the euro area and the broader European economy.
- The European Commission expected pan-EU growth to hit 0.9% through 2024, with annual growth for the euro area to see only 0.8%.
- Economic growth is expected to tick back up in 2025, with the EU expected to see 1.7% growth with the euro area trailing with 1.5% overall growth.
- Pan-EU HICP inflation is forecast to settle to 3.0% in 2024 and 2.5% in 2025, down from 2023’s 6.3%.
- Friday's US Core Producer Price Index (PPI) is forecast to tick down to 1.6% from 1.8% for the year ended in January.
- The Michigan Consumer Sentiment Index is expected to improve slightly to 80.0 from 79.0.
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.35% | -0.23% | -0.50% | -0.36% | -0.39% | -0.33% | -0.61% | |
| EUR | 0.35% | 0.10% | -0.15% | -0.01% | -0.04% | 0.03% | -0.25% | |
| GBP | 0.24% | -0.12% | -0.27% | -0.13% | -0.16% | -0.10% | -0.37% | |
| CAD | 0.50% | 0.15% | 0.25% | 0.14% | 0.11% | 0.17% | -0.10% | |
| AUD | 0.38% | 0.00% | 0.14% | -0.14% | -0.03% | 0.04% | -0.25% | |
| JPY | 0.39% | 0.05% | 0.15% | -0.11% | 0.02% | 0.05% | -0.22% | |
| NZD | 0.33% | -0.03% | 0.10% | -0.17% | -0.03% | -0.06% | -0.28% | |
| CHF | 0.61% | 0.26% | 0.38% | 0.12% | 0.26% | 0.22% | 0.29% |
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 finds chart ground above 1.0755
EUR/USD rose on Thursday, extending a recovery from the midweek’s decline into the 1.0700 handle, paring back recent losses and scrambling back over the 200-hour Simple Moving Average (SMA) at 1.0755.
The pair briefly tested 1.0785, and the EUR/USD remains bid into near-term bullish territory but remains down from the last swing high into 1.0800.
Despite an intraday recovery, the EUR/USD is still on the bearish side of the 200-day SMA near 1.0830, and the pair is still down 3.3% from December’s peak bids at 1.1140.
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.
Author
Joshua Gibson
FXStreet
Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.
