EUR/USD extends gains as US reopening boosts investors' optimism
- The Euro pulls back from two-week highs above 1.1630, but remains above 1.1600.
- Eurozone Industrial Production grew well below expectations in September.
- The end of the US government shutdown has triggered a moderate appetite for risk.
EUR/USD retreated from two-week highs right above 1.1630 but remains positive on daily charts, trading at 1.1615 at the time of writing. A positive risk mood, following the reopening of the US federal government, has offset the downbeat Eurozone Industrial Production report released earlier on the day, and is keeping the pair buoyed so far.
Industrial Production increased at a 0.2% rate in the Eurozone in September, following an upwardly revised 1.1% decline in August, while year-on-year, factory activity remained expanding at a steady 1.2% pace. These figures undershoot the market expectations of a 0.7% monthly growth and a 2.1% yearly growth improvement, and have capped the Euro's recovery.
The market sentiment, however, remains positive after the US President Donald Trump signed the bill that ended a 43-day-long US government shutdown. This will allow for the release of a backlog of US macroeconomic figures, although the White House has warned that October's employment and inflation figures might never see the light.
On Wednesday, Federal Reserve (Fed) officials continued to show their divergences, with Governor Stephen Miran reiterating the need for further interest rate cuts, while Atlanta Fed President Raphael Bostic showed a more cautious view, playing down the labour market's weakness and highlighting the upside risks to inflation.
The highlight today would be the US Consumer Price Index (CPI), but it is unlikely to be released. In that sense, some Fed speakers and the Monthly Budget Statement may provide some guidance for US Dollar (USD) crosses.
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 | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.13% | -0.08% | 0.02% | -0.02% | -0.51% | -0.03% | -0.15% | |
| EUR | 0.13% | 0.05% | 0.16% | 0.11% | -0.37% | 0.11% | -0.01% | |
| GBP | 0.08% | -0.05% | 0.10% | 0.06% | -0.42% | 0.06% | -0.06% | |
| JPY | -0.02% | -0.16% | -0.10% | -0.05% | -0.53% | -0.08% | -0.17% | |
| CAD | 0.02% | -0.11% | -0.06% | 0.05% | -0.47% | -0.02% | -0.12% | |
| AUD | 0.51% | 0.37% | 0.42% | 0.53% | 0.47% | 0.48% | 0.36% | |
| NZD | 0.03% | -0.11% | -0.06% | 0.08% | 0.02% | -0.48% | -0.12% | |
| CHF | 0.15% | 0.01% | 0.06% | 0.17% | 0.12% | -0.36% | 0.12% |
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: The US Dollar dips as the US shutdown ends
- The US Dollar is trading lower across the board with investors celebrating the end of the longest US government shutdown in history.
- Private data released recently revealed a stalled labor market, but the odds for further Fed monetary easing this year remain evenly split. The CME Group's Fed Watch tool shows that bets for a quarter-point rate cut in December have eased to 54%, from 67% last week and about 95% one month ago.
- On Wednesday, Fed Governor Stephen Miran reiterated that the current monetary policy is too restrictive and that is partly responsible for the labour market weakness that the central bank is tasked with avoiding.
- On the other side of the spectrum, Atlanta Fed President Raphael Bostic assessed that the labor market is in a "curious state of balance," while, according to his view, lowering interest rates further might feed the inflation beast, leading to serious trouble.
- Bostic also announced that he will retire at the end of his term in February 2026, which is likely to give US President Trump the chance to replace him with another partisan dove to push for a more accommodative monetary policy.
- On Wednesday, German inflation data confirmed that the Harmonized Index of Consumer Prices (HICP) grew at a 0.3% pace in October and at 2.3% in the last 12 months, slightly below the 2.4% yearly inflation seen in September. Likewise, the German CPI accelerated to 0.3% in October from 0.2% in September, although the yearly rate eased to 2.3% from the previous month's 2.4% reading.
Technical Analysis: EUR/USD is eroding the top of the bearish channel
EUR/USD has pierced the top of a descending channel from early October highs. The 4-hour Relative Strength Index (RSI) consolidates within bullish territory nearing overbought conditions after a seven-day rally, but the Moving Average Convergence Divergence (MACD) is about to cross below the signal line, which suggests that upside momentum might be fading.
Bulls should remain above a previous support in the area of 1.1620-1.1625 (October 28 low), and the channel top, currently around 1.1615, to confirm a trend shift, aiming for the October 28 and 29 highs near 1.1670, and the October 17 high, near 1.1730.
On the other side, downside attempts are being contained above Wednesday's lows of 1.1565 for now. Below, the pair might find support at the 1.1530-1.1540 area (near November 7 and 10 lows) ahead of the 1.1500 psychological level and the key support at the November 5 low around 1.1470.
Euro FAQs
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%).
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.
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.
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.
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
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.
