- EUR/USD trades slightly below 1.0900 in the European session on Friday.
- The US economic calendar will feature producer inflation data for June.
- Near-term technical outlook points to overbought conditions for the pair.
EUR/USD gathered bullish momentum in the American session on Thursday and reached its highest level since early June at 1.0900. After staging a downward correction, the pair holds comfortably above 1.0850 in the European session on Friday.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.42% | -1.03% | -1.00% | -0.21% | -0.36% | 0.47% | 0.00% | |
| EUR | 0.42% | -0.42% | -0.24% | 0.52% | 0.21% | 1.23% | 0.76% | |
| GBP | 1.03% | 0.42% | 0.12% | 0.99% | 0.63% | 1.65% | 1.18% | |
| JPY | 1.00% | 0.24% | -0.12% | 0.80% | 0.67% | 1.65% | 1.06% | |
| CAD | 0.21% | -0.52% | -0.99% | -0.80% | -0.19% | 0.69% | 0.23% | |
| AUD | 0.36% | -0.21% | -0.63% | -0.67% | 0.19% | 1.02% | 0.54% | |
| NZD | -0.47% | -1.23% | -1.65% | -1.65% | -0.69% | -1.02% | -0.47% | |
| CHF | -0.00% | -0.76% | -1.18% | -1.06% | -0.23% | -0.54% | 0.47% |
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).
Soft inflation data from the US caused the US Dollar (USD) to come under heavy selling pressure. The Consumer Price Index (CPI) declined by 0.1% on a monthly basis, while the core CPI rose only 0.1% in the same period. Both of these readings came in below market expectations and allowed investors to continue to price in a Federal Reserve (Fed) rate cut in September.
According to the CME FedWatch Tool, the probability of the Fed leaving the policy rate unchanged in September declined below 10% from above-20% before the CPI data releases.
In the second half of the day, the Producer Price Index (PPI) data for June will be featured in the US economic docket. On a monthly basis, the PPI is forecast to rise 0.1%. A negative reading could put additional weight on the USD's shoulders and help EUR/USD push higher. On the other hand, a stronger-than-forecast increase could help the USD stay resilient against its rivals but market reaction could remain limited.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays above 70, suggesting that EUR/USD remains technically overbought despite the pullback seen in the late American session on Thursday.
On the downside, 1.0840-1.0850 (Fibonacci 23.6% retracement of the latest uptrend, static level) aligns as first support before 1.0800, where the 100-day and the 200-day Simple Moving Averages (SMA) are located. In case EUR/USD rises above 1.0900 (static level, psychological level) and confirms this level as support, 1.0950 (static level) could be seen as next resistance before 1.1000 (psychological level, static level).
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.
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