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Euro defines trading range before next breakout

By Published On: June 19, 20249 min readViews: 1280 Comments on Euro defines trading range before next breakout

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  • EUR/USD fluctuates in a tight channel above 1.0700 on Wednesday.
  • Near-term technical highlights the lack of directional momentum.
  • US markets will remain closed in observance of the Juneteenth Holiday.

EUR/USD struggles to find direction and fluctuates in a narrow band slightly below 1.0750 on Wednesday. The pair’s action could remain subdued as financial markets in the US will remain closed on in observance of the Juneteenth Holiday.

Euro PRICE This week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.33% -0.34% 0.24% -0.18% -0.82% -0.08% -0.72%
EUR 0.33%   -0.00% 0.59% 0.15% -0.58% 0.29% -0.37%
GBP 0.34% 0.00%   0.66% 0.15% -0.60% 0.25% -0.37%
JPY -0.24% -0.59% -0.66%   -0.33% -1.06% -0.19% -0.90%
CAD 0.18% -0.15% -0.15% 0.33%   -0.70% 0.10% -0.52%
AUD 0.82% 0.58% 0.60% 1.06% 0.70%   0.94% 0.23%
NZD 0.08% -0.29% -0.25% 0.19% -0.10% -0.94%   -0.63%
CHF 0.72% 0.37% 0.37% 0.90% 0.52% -0.23% 0.63%  

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 US Dollar (USD) came under modest bearish pressure and EUR/USD edged higher in the early American session on Wednesday following the weaker-than-forecast Retail Sales data. Later in the session, comments from Federal Reserve (Fed) officials and the cautious market mood helped the USD find a foothold and limited EUR/USD’s upside. 

Alberto Musalem, incoming President of the St. Louis Fed, said on Tuesday that he would be willing to tighten policy further if inflation figures were to become stuck above the Fed’s 2% target. In the meantime, Dallas Fed President Lorie Logan remarked that the recent data indicating a slowdown in inflation is “encouraging,” but emphasized that the Fed must remain cautious and patient regarding interest-rate policy.

On Thursday, the US economic calendar will feature weekly Initial Jobless Claims and Building Permits data for May. Market participants will also continue to pay close attention to comments from central bank officials in the second half of the week.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays flat near 50, reflecting the pair’s indecisiveness. In case the pair manages to hold above 1.0730, where the Fibonacci 61.8% retracement of the latest uptrend is located, 1.0760 (Fibonacci 50% retracement) and 1.0800 (Fibonacci 38.2% retracement) could be seen as next resistance levels.

On the downside, 1.0700 (psychological level, static level) could be seen as interim support before 1.0670 (Fibonacci 78.6% retracement) and 1.0600 (beginning point of the uptrend).

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.

 

  • EUR/USD fluctuates in a tight channel above 1.0700 on Wednesday.
  • Near-term technical highlights the lack of directional momentum.
  • US markets will remain closed in observance of the Juneteenth Holiday.

EUR/USD struggles to find direction and fluctuates in a narrow band slightly below 1.0750 on Wednesday. The pair’s action could remain subdued as financial markets in the US will remain closed on in observance of the Juneteenth Holiday.

Euro PRICE This week

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the Japanese Yen.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   -0.33% -0.34% 0.24% -0.18% -0.82% -0.08% -0.72%
EUR 0.33%   -0.00% 0.59% 0.15% -0.58% 0.29% -0.37%
GBP 0.34% 0.00%   0.66% 0.15% -0.60% 0.25% -0.37%
JPY -0.24% -0.59% -0.66%   -0.33% -1.06% -0.19% -0.90%
CAD 0.18% -0.15% -0.15% 0.33%   -0.70% 0.10% -0.52%
AUD 0.82% 0.58% 0.60% 1.06% 0.70%   0.94% 0.23%
NZD 0.08% -0.29% -0.25% 0.19% -0.10% -0.94%   -0.63%
CHF 0.72% 0.37% 0.37% 0.90% 0.52% -0.23% 0.63%  

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 US Dollar (USD) came under modest bearish pressure and EUR/USD edged higher in the early American session on Wednesday following the weaker-than-forecast Retail Sales data. Later in the session, comments from Federal Reserve (Fed) officials and the cautious market mood helped the USD find a foothold and limited EUR/USD’s upside. 

Alberto Musalem, incoming President of the St. Louis Fed, said on Tuesday that he would be willing to tighten policy further if inflation figures were to become stuck above the Fed’s 2% target. In the meantime, Dallas Fed President Lorie Logan remarked that the recent data indicating a slowdown in inflation is “encouraging,” but emphasized that the Fed must remain cautious and patient regarding interest-rate policy.

On Thursday, the US economic calendar will feature weekly Initial Jobless Claims and Building Permits data for May. Market participants will also continue to pay close attention to comments from central bank officials in the second half of the week.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays flat near 50, reflecting the pair’s indecisiveness. In case the pair manages to hold above 1.0730, where the Fibonacci 61.8% retracement of the latest uptrend is located, 1.0760 (Fibonacci 50% retracement) and 1.0800 (Fibonacci 38.2% retracement) could be seen as next resistance levels.

On the downside, 1.0700 (psychological level, static level) could be seen as interim support before 1.0670 (Fibonacci 78.6% retracement) and 1.0600 (beginning point of the uptrend).

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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