- EUR/USD found little support from ECB Economic Bulletin.
- US Initial Jobless Claims provided little spark for markets.
- Euro traders look to Friday’s Germany HICP inflation.
EUR/USD tested into a near-term low of 1.0741 on Thursday as the latest Economic Bulletin from the European Central Bank (ECB) provided little new information for investors looking for guidance on when to expect rate cuts. The ECB continues to grapple with a lopsided European economy. Euro area price pressures remain higher than the ECB would like to see despite an ongoing softening in broad economic figures and faltering growth for the European economy.
Somewhat adding to the daily uptick in spot, ECB hawk Board member Robert Holzmann left the door open to the probability that the central bank could not cut rates at all this year.
US Initial Jobless Claims came in slightly better than expected, but a mid-tier data schedule for the US this week is keeping broad-market risk appetite hanging relatively in the middle.
Daily Digest Market Movers: EUR/USD gains traction as investors assess a May rate cut by the Fed
- ECB’s Economic Bulletin reveals little new, peels back the layers on hampered ECB.
- Inflation continues to decline.
- Rates will remain sufficiently restrictive.
- Inflation is expected to keep easing through 2024.
- Economic risks remain tilted to the downside.
- Elevated wage growth, declining labor productivity keeps price pressure high.
- US Initial Jobless Claims printed at 218K for the week ended February 2, markets expected 220K.
- Four-week average Initial Jobless Claims ticked higher to 212.25K from 208.5K (revised up from 207.75K).
- Richmond Federal Reserve (Fed) President Thomas Barkin on Thursday:
- Fed Chairman Jerome Powell speaks for the Federal Open Market Committee, will not undercut or explain the Chairman’s statements.
- Fed remains focused on inflation and unemployment, not US government debt.
- An economic downturn would be a case for a rate cut.
- The Fed has plenty of time to remain patient on rate changes.
- Fed is in no rush to cut rates.
- Barkin won’t take too much signal from single-month data.
- Remains cautious regarding the accuracy of economic numbers at the start of the year, but data remains remarkable.
- Friday’s YoY German Harmonized Index of Consumer Prices (HICP) inflation report is expected to hold steady at 3.1% for January, with the MoM figure likewise forecast to hold steady at -0.2%.
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 | 0.03% | 0.09% | 0.01% | 0.49% | 0.82% | 0.29% | -0.05% | |
| EUR | -0.03% | 0.06% | 0.00% | 0.47% | 0.79% | 0.26% | -0.09% | |
| GBP | -0.09% | -0.05% | -0.06% | 0.41% | 0.74% | 0.20% | -0.16% | |
| CAD | -0.02% | 0.01% | 0.06% | 0.47% | 0.80% | 0.27% | -0.09% | |
| AUD | -0.50% | -0.47% | -0.41% | -0.47% | 0.33% | -0.20% | -0.57% | |
| JPY | -0.83% | -0.81% | -0.75% | -0.81% | -0.33% | -0.54% | -0.89% | |
| NZD | -0.29% | -0.26% | -0.20% | -0.27% | 0.21% | 0.53% | -0.36% | |
| CHF | 0.07% | 0.09% | 0.15% | 0.09% | 0.57% | 0.88% | 0.36% |
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 seems well supported near 1.0720
EUR/USD dipped on Thursday, falling toward 1.0740 before seeing a brief pullback in the US market session, but the pair remains hamstrung below the 200-hour Simple Moving Average (SMA) at 1.0800.
Daily candlesticks have EUR/USD stuck on a near-term technical support level from 1.0750, and bidders will be tempted to drive the pair back into the bullish side of the 200-day SMA at 1.0835. The EUR/USD remains down over 3% from December’s peak bids at 1.1140.
EUR/USD hourly chart
EUR/USD daily chart
ECB FAQs
What is the ECB and how does it influence 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 for the region.
The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
What is Quantitative Easing (QE) and how does it affect the Euro?
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.
QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
What is Quantitative tightening (QT) and how does it affect the Euro?
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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