- EUR/USD comes under pressure as the Euro weakens on firm ECB rate cuts prospects.
- The Eurozone’s weak economic outlook supports ECB rate cut bets for September.
- The US Dollar regains ground with US core PCE inflation data under the spotlight.
EUR/USD slumps from fresh highs of 1.1200 in Wednesday’s New York session as the Euro (EUR) weakens. The Euro underperforms its major peers as investors seem confident that the European Central Bank (ECB) will cut interest rates again in September.
The ECB started reducing interest rates in June as policymakers appear confident that price pressures in the Eurozone will return to the bank’s target of 2% in 2025. However, it decided to leave its key borrowing rates unchanged in July as officials were worried that an aggressive policy easing process could revamp inflationary pressures again.
With evidence from Eurozone flash HCOB PMI for August and Q2 Negotiated Wage Rates that the overall economic outlook is uncertain and wage pressures are easing, the ECB is widely anticipated to reduce interest rates by 25 bps in September. Traders also see the ECB cutting borrowing rates again somewhere in the last quarter of this year.
For fresh cues on the interest rate cut path, investors await the flash Harmonized Index of Consumer Prices (HICP) data for August for Germany and the overall Eurozone, which will be published on Thursday and Friday, respectively. Economists expect that price pressures to have decelerated.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| EUR | USD | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| EUR | -0.66% | -0.24% | -0.19% | -0.38% | -0.39% | -0.41% | -0.33% | |
| USD | 0.66% | 0.42% | 0.45% | 0.25% | 0.28% | -0.02% | 0.31% | |
| GBP | 0.24% | -0.42% | 0.02% | -0.18% | -0.14% | -0.14% | -0.12% | |
| JPY | 0.19% | -0.45% | -0.02% | -0.17% | -0.16% | -0.22% | -0.14% | |
| CAD | 0.38% | -0.25% | 0.18% | 0.17% | 0.03% | 0.00% | 0.06% | |
| AUD | 0.39% | -0.28% | 0.14% | 0.16% | -0.03% | -0.03% | 0.02% | |
| NZD | 0.41% | 0.02% | 0.14% | 0.22% | -0.01% | 0.03% | 0.06% | |
| CHF | 0.33% | -0.31% | 0.12% | 0.14% | -0.06% | -0.02% | -0.06% |
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).
Daily digest market movers: EUR/USD slides sharply on firm ECB rate-cut bets
- EUR/USD corrects to near 1.1100 in North American trading hours. The major currency pair drops as the US Dollar (USD) regains ground after posting a fresh year-to-date (YTD) low this week. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, edges higher to near 100.80 from fresh lows of 100.50.
- A mild recovery in the US Dollar appears to be a short-lived pullback move for now, which could be capitalized as a selling opportunity by market participants. The near-term outlook for the Greenback is vulnerable on sheer optimism that the Federal Reserve (Fed) will start reducing interest rates in September.
- While Fed rate cuts in September have been fully priced in by traders, bets remain split over whether the central bank will cut interest rates gradually by 25 basis points (bps) or deliver a larger one of 50 bps. According to the CME FedWatch tool, 30-day Federal Funds Futures pricing data shows that the likelihood of a 50-bps interest rate reduction in September is 34.5%, while the rest favors a cut by 25 bps.
- For fresh cues about the potential rate-cut size, investors await the United States (US) core Personal Consumption Expenditure Inflation (PCE) data for July, which will be published on Friday. The PCE Price Index report is expected to show that the annual core inflation rose by 2.7%, up from June’s reading of 2.6%, with monthly figures growing steadily by 0.2%. Signs of a further decline in the underlying inflation would prompt expectations for the Fed to adopt an aggressive policy-easing approach. On the contrary, sticky figures would dampen this jumbo rate-cut scenario.
Technical Analysis: EUR/USD sees support near 1.1100
EUR/USD declines to near 1.1100 after posting a fresh swing high at 1.1200. The broader outlook of the major currency pair remains firm as it holds the breakout of the Symmetrical Triangle chart pattern formed on the weekly time frame. The upward-sloping 20-week Exponential Moving Average (EMA) near 1.0900 supports more upside ahead.
The 14-period Relative Strength Index (RSI) oscillates in the bullish range of 60.00-80.00, suggesting a strong upside momentum. On the upside, the July 2023 high at 1.1275 and the January 2022 high of 1.1500 will be the next stops for the Euro bulls. The downside is expected to remain cushioned near the psychological support of 1.1000.
Economic Indicator
Core Harmonized Index of Consumer Prices (YoY)
The Core Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, – released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Core HICP excludes volatile components like food, energy, alcohol, and tobacco. The Core HICP is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Next release: Fri Aug 30, 2024 09:00 (Prel)
Frequency: Monthly
Consensus: 2.8%
Previous: 2.9%
Source: Eurostat
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 extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
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.