- EUR/USD recovered above 1.0650 following Wednesday's decline.
- Hawkish ECB commentary helped the Euro stay resilient against the US Dollar.
- Risk aversion could limit the pair's recovery in the near term.
After rising to a fresh six-day high of 1.0738 in the American session on Wednesday, EUR/USD reversed its direction and closed the day below 1.0700. The pair extended its slide to a fresh multi-month low of 1.0617 in the Asian session on Thursday before recovering back above 1.0650.
The renewed US Dollar (USD) strength following the Federal Reserve's (Fed) policy announcements weighed heavily on EUR/USD. Although the Fed left the policy rate unchanged at 5.25%-5.5% as expected, the revised Summary of Economic Projections (SEP) revealed that the US central bank was on track to hike the policy rate by another 25 basis points before the end of the year. Furthermore, the projection for a total of 100 bps rate cuts in 2024 in June's SEP got revised lower to 50 bps in September, highlighting policymakers' willingness to keep the policy rate higher for longer.
In turn, the benchmark 10-year US Treasury bond yield climbed to its strongest level since 2007 near 4.45% and the USD Index touched a six-month-high of 105.68.
Early Thursday, hawkish comments from European Central Bank (ECB) officials helped the Euro stay resilient against the USD.
ECB policymaker Gabriel Makhlouf said that a further rate hike was still possible and added that there was a little chance of a rate cut before March 2024. Similarly, policymaker Martins Kazaks argued that mid-2024 rate cut expectations were too early, given the current outlook.
Euro price this week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the .
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.12% | 0.69% | -0.22% | 0.43% | 0.22% | -0.21% | 0.93% | |
| EUR | -0.10% | 0.62% | -0.33% | 0.34% | 0.12% | -0.30% | 0.83% | |
| GBP | -0.72% | -0.59% | -0.94% | -0.25% | -0.49% | -0.90% | 0.22% | |
| CAD | 0.22% | 0.32% | 0.92% | 0.63% | 0.42% | 0.01% | 1.14% | |
| AUD | -0.44% | -0.32% | 0.26% | -0.64% | -0.23% | -0.65% | 0.49% | |
| JPY | -0.23% | -0.13% | 0.50% | -0.42% | 0.22% | -0.45% | 0.72% | |
| NZD | 0.20% | 0.32% | 0.93% | -0.01% | 0.64% | 0.41% | 1.15% | |
| CHF | -0.94% | -0.82% | -0.24% | -1.15% | -0.49% | -0.72% | -1.14% |
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).
In the second half of the day, weekly Initial Jobless Claims data will be featured in the US economic docket. Investors will also pay close attention to the performance of major equity indexes in the US. Following a bullish opening, the S&P 500 Index lost nearly 1% on Wednesday as investors reacted to the hawkish Fed dot plot. In case US stocks manage to stage a rebound after the opening bell, the USD could have a hard time preserving its strength and help EUR/USD edge higher.
EUR/USD Technical Analysis
EUR/USD was last seen trading in the upper-half of the descending regression channel. Meanwhile, the Relative Strength Index (RSI) indicator on the four-hour chart stays slightly above 40, suggesting that the bearish bias stays intact, with a potential of a technical correction in the short term.
On the upside, 1.0670 (20-period Simple Moving Average (SMA), upper-limit of the descending channel) aligns as immediate resistance before 1.0700 (psychological level, static level, 50-period SMA). A four-hour close above the latter could attract buyers and open the door for an extended recovery toward 1.0740 (100-period SMA).
1.0630 (static level, mid-point of the descending channel) aligns as key support level. In case EUR/USD falls below that level and starts using it as resistance, 1.0600 (psychological level, static level, lower-limit of the descending channel) and 1.0540 (static level from March) could be set as next bearish targets.
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