- EUR/USD consolidates weekly losses above 1.1000 on Thursday.
- European Central Bank (ECB) is widely expected to lower key rates by 25 bps.
- The US economic calendar will feature weekly Jobless Claims and August producer inflation data.
EUR/USD failed to preserve its recovery momentum on Wednesday and closed the day marginally lower. The pair stays in a consolidation phase above 1.1000 as markets await the European Central Bank's (ECB) policy announcements and the US data releases.
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 Australian Dollar.
USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
---|---|---|---|---|---|---|---|---|
USD | 0.63% | 0.61% | 0.23% | 0.05% | -0.08% | 0.65% | 1.19% | |
EUR | -0.63% | -0.07% | -0.36% | -0.57% | -0.76% | 0.04% | 0.54% | |
GBP | -0.61% | 0.07% | -1.44% | -0.51% | -0.69% | 0.09% | 0.60% | |
JPY | -0.23% | 0.36% | 1.44% | -0.19% | -0.29% | 0.42% | 1.14% | |
CAD | -0.05% | 0.57% | 0.51% | 0.19% | -0.08% | 0.59% | 1.30% | |
AUD | 0.08% | 0.76% | 0.69% | 0.29% | 0.08% | 0.78% | 1.27% | |
NZD | -0.65% | -0.04% | -0.09% | -0.42% | -0.59% | -0.78% | 0.52% | |
CHF | -1.19% | -0.54% | -0.60% | -1.14% | -1.30% | -1.27% | -0.52% |
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).
The mixed inflation report from the US helped the US Dollar (USD) stay resilient against its rivals in the American session on Wednesday and didn't allow EUR/USD to hold its ground. Annual inflation, as measured by the change in the Consumer Price Index (CPI), softened to 2.5% in August from 2.9% in July. However, the core CPI, which excludes volatile food and energy prices, rose 0.3% on a monthly basis, surpassing the market expectation for an increase of 0.2%.
The ECB is expected to lower key rates by 25 basis points following the September policy meeting. Since this decision is widely anticipated, markets could react to ECB President Christine Lagarde's comments on the policy outlook.
Lagarde is unlikely to confirm or deny further policy easing later this year. In case she adopts an optimistic tone about inflation developments, while voicing concerns about the uncertainty surrounding the growth outlook, markets could see this as a hint of additional rate cuts in the near future. In this scenario, the Euro could come under renewed selling pressure. If Lagarde notes that they need to see more progress in disinflation before opting for another rate reduction, the immediate reaction could help the Euro find demand.
The US economic calendar will feature weekly Initial Jobless Claims and the Producer Price Index data for August. Following the CPI release, the probability of a 50 basis points Federal Reserve (Fed) rate cut in September declined to 13%, according to the CME FedWatch Tool. These data are unlikely to alter the market pricing of the Fed rate outlook in a significant way. Hence, the impact on the USD's valuation could remain short-lived.
EUR/USD Technical Analysis
EUR/USD remains bearish in the near term, with the Relative Strength Index (RSI) indicator on the 4-hour chart staying well below 50. The pair could face immediate support at 1.1010-1.1000 (200-period Simple Moving Average (SMA), Fibonacci 50% retracement of the latest uptrend) before 1.0940 (Fibonacci 61.8% retracement) and 1.0900 (psychological level, static level).
On the upside, immediate resistance is located at 1.1040 (Fibonacci 38.2% retracement) ahead of 1.1060 (50-period SMA) and 1.1100 (Fibonacci 23.6% retracement, 100-period SMA).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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
Editors’ Picks
![EUR/USD holds above 1.1000 following ECB policy announcements](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-59004818_XtraSmall.jpg)
EUR/USD holds above 1.1000 following ECB policy announcements
EUR/USD trades modestly higher on the day above 1.1000 on Thursday as the US Dollar struggles to find demand after August producer inflation data. Meanwhile, the ECB lowered the benchmark interest rate by 25 bps as expected.
![GBP/USD trades above 1.3050 as USD loses strength](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/iStock-170160529_XtraSmall.jpg)
GBP/USD trades above 1.3050 as USD loses strength
GBP/USD stays in positive territory above 1.3050 in the American session on Thursday. The improving risk mood and the lower-than-forecast annual PPI reading for August from the US weigh on the USD, helping the pair edge higher.
![Gold climbs to new all-time high above $2,550](https://editorial.fxstreet.com/images/Markets/Currencies/Crosses/XAUUSD/gold-bar-and-dollar-bills-42586628_XtraSmall.jpg)
Gold climbs to new all-time high above $2,550
Gold maintains its bullish bias amidst the mild pullback in the Greenback and trades at a new record high at around $2,550. The data from the US showed that the annual producer inflation declined to 1.7% in August from 2.1% in July.
![Crypto Today: Bitcoin, Ethereum gain between 1% and 2% on Thursday, XRP back above $0.53](https://editorial.fxstreet.com/images/Markets/Currencies/Digital%20Currencies/Bitcoin/bitcoin_4_XtraSmall.jpg)
Crypto Today: Bitcoin, Ethereum gain between 1% and 2% on Thursday, XRP back above $0.53
BTC is back above $58,000 and ETH hovers around $2,363 at the time of writing. XRP is back above $0.5369 on September 12, gains slightly on the day.
![European Central Bank widely expected to cut interest rates in September](https://editorial.fxstreet.com/images/Macroeconomics/CentralBanks/ECB/ecb-ezb-european-central-bank-frankfurt-68897939_XtraSmall.jpg)
European Central Bank widely expected to cut interest rates in September
The European Central Bank is expected to cut key rates by 25 bps at the September policy meeting. ECB President Christine Lagarde’s presser and updated economic forecasts will be closely scrutinized for fresh policy cues.
![Moneta Markets review 2024: All you need to know](https://editorial.fxstreet.com/images/IT/Testing/Review/FXSBadgeCertifiedBackg_XtraSmall.png)
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.