Euro maintains the positive performance just below 1.0700


  • The Euro clings to daily gains vs. the US Dollar.
  • Stocks in Europe are seen closing with marked losses.
  • EUR/USD shifts its focus to a potential test of 1.0700.
  • The USD Index (DXY) remains mildly offered in the low-105.00s.
  • The FOMC gathering will be the salient event this week.
  • The US NAHB index takes centre stage later in the session.

The Euro (EUR) gains momentum against the US Dollar (USD), motivating bullish sentiment that pushes EUR/USD towards the vicinity of daily highs, reaching around 1.0680 as the new week begins.

Although the Greenback experiences some mild downward pressure, it still holds its position above the crucial 105.00 level, as indicated by the USD Index (DXY). This is happening amidst the mixed trend in US yields across various timeframes.

Regarding monetary policy, investors are still evaluating the recent dovish rate hike conducted by the European Central Bank (ECB) and maintaining their anticipation of potential interest rate cuts by the Federal Reserve (Fed) taking place in the second quarter of 2024.

On another front, EUR net longs extended the downtrend and reached levels last seen in mid-November 2022, according to the latest positioning report by the CFTC for the week ended on September 12. The period under study saw the pair climb to the 1.0750 region and quickly lose ground soon afterwards the ECB event on September 14.

The absence of data releases in the euro docket should shift attention to the US calendar, where the NAHB Housing Price Index and Long-Term TIC Flows are due in the American session.

Daily digest market movers: Euro remains under pressure below 1.0827

  • The EUR looks to consolidate the bounce off recent multi-month lows vs. the USD.
  • US and German yields have started the week in a mixed fashion.
  • Investors see the Fed keeping rates unchanged this week.
  • Fitch agency confirms Germany’s AAA rating with a stable outlook.
  • Traders see potential rate cuts by the Fed in H1 2024.
  • Expectations of an impasse in the ECB’s hiking cycle appear to be gathering traction.
  • The Bundesbank's monthly report sees the German economy contracting in Q3.
  • ECB's Peter Kazimir rules out further interest rate raises. 

Technical Analysis: Euro keeps the door open to another test of 1.0630

EUR/USD looks to extend Friday’s rebound from multi-week lows near 1.0630.

If the EUR/USD breaks below its September 15 low of 1.0631, it may revisit the March 15 low of 1.0516 before reaching the 2023 bottom of 1.0481 seen on January 6.

On the upside, the critical 200-day Simple Moving Average (SMA) is located at 1.0827. Bullish momentum may develop if the pair breaks through this key barrier, leading it to a test of the provisional 55-day SMA at 1.0922 ahead of the August 30 high of 1.0945. This scenario may open the way for a rally towards the psychological level of 1.1000 and the August 10 top of 1.1064. If the pair clears this region, it may relieve some of the bearish pressure and go for the July 27 peak at 1.1149, followed by the 2023 high at 1.1275 from July 18.

As long as the EUR/USD is below the 200-day SMA, the pair might continue to fall.

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.

Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended content

Editors’ Picks

EUR/USD stays below 1.0900 as USD benefits from souring mood

EUR/USD stays below 1.0900 as USD benefits from souring mood

EUR/USD stays on the back foot and trades below 1.0900 following Thursday's sharp decline. Dovish comments from European Central Bank officials and the risk-averse market atmosphere make it difficult for the pair to stage a rebound on Friday.

EUR/USD News

GBP/USD flirts with weekly low below 1.2950

GBP/USD flirts with weekly low below 1.2950

GBP/USD trades in negative territory below 1.2950 on Friday. Disappointing Retail Sales data from the UK combined with the US Dollar (USD) recovery, fuelled by safe-haven flows, causes the pair to stay under bearish pressure ahead of the weekend.

GBP/USD News

Gold extends daily slide, trades near $2,400

Gold extends daily slide, trades near $2,400

Gold's correction from the record-high set earlier in the week deepens on Friday. With the US Dollar (USD) benefiting from safe-haven flows and the 10-year US yield holding steady above 4.2%, XAU/USD tests $2,400.

Gold News

Top 10 crypto market movers as Bitcoin and Ethereum hold steady ahead of $1.8 billion options expiry

Top 10 crypto market movers as Bitcoin and Ethereum hold steady ahead of $1.8 billion options expiry

Bitcoin and Ethereum hold steady above $64,000 and $3,400 as $1.8 billion in options expire on Friday. WazirX hack of $230 million potentially linked to Lazarus Group ushers correction in Shiba Inu, among other assets. 

Read more

Week ahead – Flash PMIs, US GDP and BoC decision on tap

Week ahead – Flash PMIs, US GDP and BoC decision on tap

US data awaited amid overly dovish Fed rate cut bets. July PMIs to reveal how economies entered H2. BoC decides on monetary policy, may cut rates again.

Read more

Forex MAJORS

Cryptocurrencies

Signatures