- EUR/USD trades near 1.1050 in the European session on Tuesday.
- The technical outlook is yet to point to a buildup of recovery momentum.
- August ISM Manufacturing PMI will be featured in the US economic calendar.
EUR/USD managed to register small daily gains on Monday but failed to gather recovery momentum. The pair stays on the back foot in the European morning on Tuesday and trades near 1.1050.
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 Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | 0.05% | -0.28% | 0.19% | 0.22% | 0.75% | 0.43% | |
| EUR | 0.07% | 0.14% | -0.24% | 0.23% | 0.29% | 0.80% | 0.49% | |
| GBP | -0.05% | -0.14% | -0.38% | 0.08% | 0.13% | 0.69% | 0.33% | |
| JPY | 0.28% | 0.24% | 0.38% | 0.43% | 0.54% | 1.16% | 0.65% | |
| CAD | -0.19% | -0.23% | -0.08% | -0.43% | 0.06% | 0.56% | 0.24% | |
| AUD | -0.22% | -0.29% | -0.13% | -0.54% | -0.06% | 0.50% | 0.19% | |
| NZD | -0.75% | -0.80% | -0.69% | -1.16% | -0.56% | -0.50% | -0.32% | |
| CHF | -0.43% | -0.49% | -0.33% | -0.65% | -0.24% | -0.19% | 0.32% |
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).
Thin trading conditions amid the Labor Day holiday in the US made it difficult for EUR/USD to make a decisive move in either direction at the start of the week. The cautious market stance helps the US Dollar (USD) hold its ground early Tuesday and makes it difficult for the pair to gain traction.
In the second half of the day, the ISM will release Manufacturing PMI data for August. The headline PMI is forecast to rise to 47.5 from 46.8 in July. In case this data comes in above 50 and shows an expansion in the manufacturing sector's activity, the immediate market reaction could help the USD gather further strength.
If the headline PMI arrives near the market expectation, investors could react to the change in the Employment Index of the survey. In July, the Employment Index dropped to its lowest level in four years at 43.4. A significant recovery in this data could ease fears over loosening conditions in the labor market and provide a boost to the USD. On the other hand, a reading below 45, which would show an ongoing decline in the number of employed in the manufacturing sector, could weigh on the currency and open the door for a rebound in EUR/USD.
EUR/USD Technical Analysis
EUR/USD retreated below the 100-period Simple Moving Average, currently located at 1.1070, on the 4-hour chart and closed the last two candles below this level. Additionally, the Relative Strength Index (RSI) indicator stays below 40, reflecting a lack of buyer interest.
EUR/USD could face immediate support at 1.1040 (Fibonacci 38.2% retracement of the latest uptrend) ahead of 1.1000 (psychological level, Fibonacci 50% retracement) and 1.0970 (200-period SMA).
On the upside, resistances are located at 1.1070 (100-period SMA), 1.1100 (Fibonacci 23.6% retracement) and 1.1160 (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.
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 stays near 1.0400 in thin holiday trading
EUR/USD trades with mild losses near 1.0400 on Tuesday. The expectation that the US Federal Reserve will deliver fewer rate cuts in 2025 provides some support for the US Dollar. Trading volumes are likely to remain low heading into the Christmas break.
GBP/USD struggles to find direction, holds steady near 1.2550
GBP/USD consolidates in a range at around 1.2550 on Tuesday after closing in negative territory on Monday. The US Dollar preserves its strength and makes it difficult for the pair to gain traction as trading conditions thin out on Christmas Eve.
Gold holds above $2,600, bulls non-committed on hawkish Fed outlook
Gold trades in a narrow channel above $2,600 on Tuesday, albeit lacking strong follow-through buying. Geopolitical tensions and trade war fears lend support to the safe-haven XAU/USD, while the Fed’s hawkish shift acts as a tailwind for the USD and caps the precious metal.
IRS says crypto staking should be taxed in response to lawsuit
In a filing on Monday, the US International Revenue Service stated that the rewards gotten from staking cryptocurrencies should be taxed, responding to a lawsuit from couple Joshua and Jessica Jarrett.
2025 outlook: What is next for developed economies and currencies?
As the door closes in 2024, and while the year feels like it has passed in the blink of an eye, a lot has happened. If I had to summarise it all in four words, it would be: ‘a year of surprises’.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.