EUR/USD gains ground after ECB holds and Fed repeats the same notes, NFP in the barrel
|- EUR/USD rallies on renewed Euro strength.
- Fed holds the line, says rates will come down eventually.
- Friday’s US NFP to be the key data print this week.
EUR/USD rallied into 1.0950 on Thursday, bolstered by prospects of movement from the European Central Bank (ECB) and an easing US Dollar (USD) on the back of a steady showing from Federal Reserve (Fed) Chairman Jerome Powell who reiterated most of his statements from Wednesday’s Semi-Annual Monetary Policy Report to the US Congressional House Financial Services Committee.
Thursday’s Fed outing before the Senate Banking Committee found little new material for markets as Fed Chair Powell stuck closely to familiar narrative elements. The Fed sees rate cuts coming, possibly later this year, as long as inflation continues to recede.
Daily digest market movers: EUR/USD climbs as lack of Fed news drops the Greenback
- ECB held rates as markets broadly expected.
- European inflation continues to ease, ECB President Christine Lagarde teases June rate cut.
- ECB Press Conference: Lagarde speaks on policy outlook
- ECB to reveal new framework for monetary policy implementation, possibly as soon as next week.
- Fed Chair Powell revealed little new on Thursday.
- Jerome Powell Speech: Fed Chair says removing restrictive stance of policy could begin this year
- Friday’s US Nonfarm Payrolls (NFP) expected to come in at 200K versus the previous month’s 353K, its highest print since January of 2022.
- NFP Preview: Forecasts from 10 major banks
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 | -0.46% | -0.58% | -0.40% | -0.80% | -0.84% | -0.76% | -0.54% | |
| EUR | 0.44% | -0.15% | 0.03% | -0.36% | -0.40% | -0.34% | -0.08% | |
| GBP | 0.57% | 0.12% | 0.18% | -0.23% | -0.27% | -0.19% | 0.04% | |
| CAD | 0.41% | -0.03% | -0.17% | -0.40% | -0.43% | -0.36% | -0.13% | |
| AUD | 0.80% | 0.35% | 0.22% | 0.40% | -0.03% | 0.03% | 0.28% | |
| JPY | 0.84% | 0.38% | 0.27% | 0.41% | 0.06% | 0.09% | 0.31% | |
| NZD | 0.75% | 0.31% | 0.19% | 0.36% | -0.03% | -0.07% | 0.24% | |
| CHF | 0.53% | 0.08% | -0.05% | 0.12% | -0.27% | -0.31% | -0.24% |
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 extends into bullish territory, but obstacles remain
EUR/USD rallied into 1.0950 on Thursday, and the pair is set for a fifth consecutive bullish close. The pair is up overt 2.3% from the last swing low into 1.0700, and EUR/USD has closed in the green for all but three of the last 17 trading days.
The last notable high set late in December at 1.1140 remains a far-off technical ceiling, but the pair is stretching away from the 200-day Simple Moving Average (SMA) at 1.0832. A pullback could see another bullish leg form up off a rising trendline.
EUR/USD hourly chart
EUR/USD daily chart
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.
Nonfarm Payrolls FAQs
Nonfarm Payrolls (NFP) are part of the US Bureau of Labor Statistics monthly jobs report. The Nonfarm Payrolls component specifically measures the change in the number of people employed in the US during the previous month, excluding the farming industry.
The Nonfarm Payrolls figure can influence the decisions of the Federal Reserve by providing a measure of how successfully the Fed is meeting its mandate of fostering full employment and 2% inflation. A relatively high NFP figure means more people are in employment, earning more money and therefore probably spending more. A relatively low Nonfarm Payrolls’ result, on the either hand, could mean people are struggling to find work. The Fed will typically raise interest rates to combat high inflation triggered by low unemployment, and lower them to stimulate a stagnant labor market.
Nonfarm Payrolls generally have a positive correlation with the US Dollar. This means when payrolls’ figures come out higher-than-expected the USD tends to rally and vice versa when they are lower. NFPs influence the US Dollar by virtue of their impact on inflation, monetary policy expectations and interest rates. A higher NFP usually means the Federal Reserve will be more tight in its monetary policy, supporting the USD.
Nonfarm Payrolls are generally negatively-correlated with the price of Gold. This means a higher-than-expected payrolls’ figure will have a depressing effect on the Gold price and vice versa. Higher NFP generally has a positive effect on the value of the USD, and like most major commodities Gold is priced in US Dollars. If the USD gains in value, therefore, it requires less Dollars to buy an ounce of Gold. Also, higher interest rates (typically helped higher NFPs) also lessen the attractiveness of Gold as an investment compared to staying in cash, where the money will at least earn interest.
Nonfarm Payrolls is only one component within a bigger jobs report and it can be overshadowed by the other components. At times, when NFP come out higher-than-forecast, but the Average Weekly Earnings is lower than expected, the market has ignored the potentially inflationary effect of the headline result and interpreted the fall in earnings as deflationary. The Participation Rate and the Average Weekly Hours components can also influence the market reaction, but only in seldom events like the “Great Resignation” or the Global Financial Crisis.
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