EUR/USD slumps below 1.1000 as USD rallies on strong data
- EUR/USD turned south and broke below 1.1000 in the American session.
- The US Dollar outperforms its rivals on easing concerns over an economic slowdown.
- Investors see a diminishing probability of a large Fed rate cut in September.
After touching its highest level in 2024 near 1.1050 on Wednesday, EUR/USD went into a consolidation phase during the European trading hours on Thursday. With the latest macroeconomic data releases from the US providing a boost to the USD, however, the pair lost its footing and slumped below 1.1000. At the time of press, the pair was down 0.55% on the day at 1.0955.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.54% | 0.19% | 1.22% | 0.12% | -0.01% | 0.46% | 0.98% | |
| EUR | -0.54% | -0.36% | 0.67% | -0.41% | -0.64% | -0.25% | 0.44% | |
| GBP | -0.19% | 0.36% | 1.05% | -0.05% | -0.27% | 0.12% | 0.90% | |
| JPY | -1.22% | -0.67% | -1.05% | -1.10% | -1.25% | -0.91% | -0.14% | |
| CAD | -0.12% | 0.41% | 0.05% | 1.10% | -0.14% | 0.17% | 0.96% | |
| AUD | 0.00% | 0.64% | 0.27% | 1.25% | 0.14% | 0.37% | 1.16% | |
| NZD | -0.46% | 0.25% | -0.12% | 0.91% | -0.17% | -0.37% | 0.78% | |
| CHF | -0.98% | -0.44% | -0.90% | 0.14% | -0.96% | -1.16% | -0.78% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
The US Census Bureau reported on Thursday that Retail Sales rose by 1% to $709.7 billion in July. This print came in better than the market expectation for an increase of 0.3%.
Additionally, the number of first-time applications for unemployment benefits in the US declined by 7,000 to 227,000 in the week ending August 10, the US Department of Labor announced.
With the immediate market reaction, investors started to lean toward a 25 basis points Federal Rate (Fed) cut in September and US Treasury bond yields surged higher. As of writing, the benchmark 10-year US T-bond yield was up nearly 3% on the day at 3.95%. According to the CME FedWatch Tool, the probability of the Fed opting for a 50 bps rate reduction at the next meeting now sits around 20%, down from about 50% seen earlier in the week.
The US economic calendar will not feature any other high-impact data releases on Thursday. Nevertheless, investors will pay close attention to comments from Fed policymakers later in the American session.
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
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
