- EUR/USD churns near 1.0720 as market flows buckle down for the wait to key data.
- Wednesday has a limited data docket on the offer.
- Investors look ahead to Friday’s packed data docket.
EUR/USD traded within familiar levels on Wednesday, keeping the Fiber trapped in near-term consolidation just north of 1.0700 as Euro traders hunker down for the wait to meaningful data releases. Momentum is set to remain thin as markets await fresh data to drive market flows beginning on Thursday.
Forex Today: The FX universe remains in waiting mode
Wednesday’s economic calendar is notably thin, though traders will note that the latest German GfK Consumer Confidence Survey for July is expected to improve slightly from the previous print of -20.9 to -18.9. European Central Bank (ECB) Chief Economist Philip Lane is also expected to deliver some talking points during the European market session. Still, the ECB Executive Board member is not expected to rock the boat or otherwise deviate from recent talking points shared by other ECB board members.
The US will also release the latest Bank Stress Test results, but performance is not expected to wildly deviate from previous runs through the Federal Reserve’s stress test of the US banking system. The current “severely adverse” stress test asks banks to examine the soundness of their balance sheets under a hypothetical scenario where the US Unemployment Rate reaches 10% within a two-year period, alongside an increase in market volatility, a 36% decline in housing prices, and a 40% drop in commercial real estate values.
Thursday will kick off the week’s data releases in earnest, with final pan-EU Consumer Confidence figures for June as well as a revision print for Q1’s US Gross Domestic Product (GDP) print which is expected to hold steady at 1.3% QoQ.
Friday will blow the doors off the week’s otherwise sedate economic release schedule with German Retail Sales figures for May and the latest print of US Personal Consumption Expenditure Price Index (PCE) inflation, also for the monthly period of May. One of the Federal Reserve's (Fed) preferred inflation metrics, investors will be closely monitoring a continued decrease in crucial US inflation figures to ensure the Fed stays on track to implement an initial rate cut when the Federal Open Market Committee (FOMC) convenes on September 18.
EUR/USD technical outlook
EUR/USD continues to get squeezed into near-term consolidation as the 200-hour Exponential Moving Average (EMA) weighs on intraday price action from 1.071, but a demand zone below 1.0680 is proving technical support and keeping bids bolstered.
Daily candlesticks are mired in technical congestion, but the Fiber remains poised for an extended slide as high and lows continue to chalk in lower peaks and valleys. The pair is drifting on the south side of the 200-day EMA at 1.0798, and failure to spark a firm bullish push back into the high end of recent lower highs could see the Fiber contesting the last major swing low into the 1.0600 handle.
EUR/USD hourly chart
EUR/USD daily chart
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 trades at yearly lows below 1.0500 ahead of PMI data
EUR/USD stays on the back foot and trades at its lowest level since October 2023 below 1.0500 early Friday, pressured by persistent USD strength. Investors await Manufacturing and Services PMI surveys from the Eurozone, Germany and the US.
GBP/USD falls to six-month lows below 1.2600, eyes on key data releases
GBP/USD extends its losses for the third successive session and trades at a fresh fix-month low below 1.2600. This downside is attributed to the stronger US Dollar (USD) as traders continue to evaluate the Fed's policy outlook following latest data releases and Fedspeak.
Gold rises toward $2,700, hits two-week top
Gold continues to attract haven flows for the fifth consecutive day and rises toward $2,700. XAU/USD continues to benefit from risk-aversion amid intensifying Russia-Ukraine conflict. Investors keep a close eye on geopolitics while waiting for PMI data releases.
Ethereum Price Forecast: ETH open interest surge to all-time high after recent price rally
Ethereum (ETH) is trading near $3,350, experiencing an 10% increase on Thursday. This price surge is attributed to strong bullish sentiment among derivatives traders, driving its open interest above $20 billion for the first time.
A new horizon: The economic outlook in a new leadership and policy era
The economic aftershocks of the COVID pandemic, which have dominated the economic landscape over the past few years, are steadily dissipating. These pandemic-induced economic effects are set to be largely supplanted by economic policy changes that are on the horizon in the United States.
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.