EUR/USD Forecast: Euro stays near key resistance level
- EUR/USD fluctuates in a narrow range above 1.0800 on Monday.
- The pair could stretch higher once it clears 1.0840.
- The US economic calendar will not feature any high-tier data releases.
After gaining more than 1% in the previous week, EUR/USD started the new week with a bearish gap but managed to erase its losses. In the European trading hours, the pair holds steady above 1.0800.
The broad-based selling pressure surrounding the US Dollar allowed EUR/USD to extend its weekly rally on Friday. The Bureau of Labor Statistics (BLS) reported that Nonfarm Payrolls (NFP) rose 206,000 in June. Although this reading surpassed the market forecast of 190,000, the USD struggled to find demand as the report showed that the BLS revised the May's NFP increase of 272,000 lower to 218,000. Furthermore, the Unemployment Rate ticked up to 4.1%, while the annual wage inflation softened to 3.9% from 4.1% in May, putting additional weight on the USD's shoulders.
Euro PRICE Last 7 days
The table below shows the percentage change of Euro (EUR) against listed major currencies last 7 days. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.16% | -1.34% | 0.18% | -0.29% | -1.04% | -0.67% | -0.32% | |
| EUR | 1.16% | -0.42% | 1.05% | 0.57% | -0.00% | 0.19% | 0.54% | |
| GBP | 1.34% | 0.42% | 1.44% | 1.02% | 0.42% | 0.61% | 0.96% | |
| JPY | -0.18% | -1.05% | -1.44% | -0.45% | -1.15% | -0.83% | -0.46% | |
| CAD | 0.29% | -0.57% | -1.02% | 0.45% | -0.72% | -0.38% | -0.03% | |
| AUD | 1.04% | 0.00% | -0.42% | 1.15% | 0.72% | 0.19% | 0.62% | |
| NZD | 0.67% | -0.19% | -0.61% | 0.83% | 0.38% | -0.19% | 0.37% | |
| CHF | 0.32% | -0.54% | -0.96% | 0.46% | 0.03% | -0.62% | -0.37% |
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 immediate reaction to the second round of French parliamentary election caused the Euro to lose some interest at the beginning of the week. The left-wing alliance New Popular Front won the second round of French election by securing 182 seats in the National Assembly but fell short of the 289 seats required to win a majority.
Meanwhile, the data from the Euro area showed that the Sentix Investor Confidence declined to -7.3 in July from 0.3%.
The US economic calendar will not offer any high-tier data releases on Monday. Federal Reserve (Fed) Chairman Jerome Powell will deliver the Semi-Annual Monetary Policy Report and testify before the Senate Banking Committee and House Financial Services Committee on Tuesday and Wednesday, respectively. Hence, investors could refrain from taking large positions.
EUR/USD Technical Analysis
1.0840 (Fibonacci 23.6% retracement of the latest uptrend) aligns as immediate resistance for EUR/USD. If the pair manages to clear that level and starts using it as support, 1.0900 (psychological level, static level) could be seen as next bullish target.
On the downside, the 100-day and the 200-day Simple Moving Averages form strong support at 1.0800. A daily close below this level could attract technical sellers and open the door for an extended correction toward 1.0760 (Fibonacci 50% reracement).
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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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
