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Euro tests 1.0700 as USD stages impressive comeback

By Published On: June 14, 20249.5 min readViews: 1360 Comments on Euro tests 1.0700 as USD stages impressive comeback

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  • EUR/USD stays under bearish pressure in the European session on Friday.
  • The technical outlook suggests that there is more room on the downside before the pair turns oversold.
  • The US Dollar could preserve its strength in case safe-haven flows dominate the action.

Following Wednesday’s upsurge, EUR/USD turned south and registered large losses on Thursday. The pair stays under pressure on Friday and trades at its lowest level since early May slightly below 1.0700.

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 Swiss Franc.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   1.02% -0.02% 0.47% -0.02% -0.50% -0.47% -0.63%
EUR -1.02%   -0.68% -0.30% -0.77% -1.24% -1.23% -1.38%
GBP 0.02% 0.68%   0.50% -0.09% -0.55% -0.54% -0.69%
JPY -0.47% 0.30% -0.50%   -0.48% -1.04% -1.04% -1.04%
CAD 0.02% 0.77% 0.09% 0.48%   -0.45% -0.45% -0.61%
AUD 0.50% 1.24% 0.55% 1.04% 0.45%   0.01% -0.17%
NZD 0.47% 1.23% 0.54% 1.04% 0.45% -0.01%   -0.15%
CHF 0.63% 1.38% 0.69% 1.04% 0.61% 0.17% 0.15%  

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 negative shift seen in risk mood helped the US Dollar (USD) gather strength during the American trading hours on Thursday. Additionally, the negative impact of soft inflation data on the USD started to fade away as investors reassessed the Federal Reserve’s policy outlook amid the hawkish revisions to the Summary of Economic Projections.

Meanwhile, investors’ focus shifts back to political jitters in the Eurozone following the key macroeconomic events in the US, making it difficult for the Euro to find demand. 

In the second half of the day, the US economic docket will feature the University of Michigan’s preliminary Consumer Sentiment Survey for June. Nevertheless, market participants are likely to ignore this report and stay focused on the risk perception.

At the time of press, Dow Futures were down 0.5% while S&P 500 Futures were losing 0.2%. On the other hand, Nasdaq Futures were last seen posting small daily gains. In case Wall Street’s main indexes push lower heading into the weekend, the USD is likely to continue to outperform its rivals.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 30, suggesting that the pair has some more room on the downside before it turns technically oversold. 1.0670 (Fibonacci 78.6% retracement of the latest uptrend) aligns as next support before 1.0600 (psychological level, static level).

In case EUR/USD manages to stabilize above 1.0700 (psychological level, static level), sellers could look to book profits ahead of the weekend and allow the pair to correct higher. In this scenario, 1.0760 (Fibonacci 50% retracement) could be seen as next resistance before 1.0790-1.0800, where the 100-day and the 200-day Simple Moving Averages are located.

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 stays under bearish pressure in the European session on Friday.
  • The technical outlook suggests that there is more room on the downside before the pair turns oversold.
  • The US Dollar could preserve its strength in case safe-haven flows dominate the action.

Following Wednesday’s upsurge, EUR/USD turned south and registered large losses on Thursday. The pair stays under pressure on Friday and trades at its lowest level since early May slightly below 1.0700.

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 Swiss Franc.

  USD EUR GBP JPY CAD AUD NZD CHF
USD   1.02% -0.02% 0.47% -0.02% -0.50% -0.47% -0.63%
EUR -1.02%   -0.68% -0.30% -0.77% -1.24% -1.23% -1.38%
GBP 0.02% 0.68%   0.50% -0.09% -0.55% -0.54% -0.69%
JPY -0.47% 0.30% -0.50%   -0.48% -1.04% -1.04% -1.04%
CAD 0.02% 0.77% 0.09% 0.48%   -0.45% -0.45% -0.61%
AUD 0.50% 1.24% 0.55% 1.04% 0.45%   0.01% -0.17%
NZD 0.47% 1.23% 0.54% 1.04% 0.45% -0.01%   -0.15%
CHF 0.63% 1.38% 0.69% 1.04% 0.61% 0.17% 0.15%  

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 negative shift seen in risk mood helped the US Dollar (USD) gather strength during the American trading hours on Thursday. Additionally, the negative impact of soft inflation data on the USD started to fade away as investors reassessed the Federal Reserve’s policy outlook amid the hawkish revisions to the Summary of Economic Projections.

Meanwhile, investors’ focus shifts back to political jitters in the Eurozone following the key macroeconomic events in the US, making it difficult for the Euro to find demand. 

In the second half of the day, the US economic docket will feature the University of Michigan’s preliminary Consumer Sentiment Survey for June. Nevertheless, market participants are likely to ignore this report and stay focused on the risk perception.

At the time of press, Dow Futures were down 0.5% while S&P 500 Futures were losing 0.2%. On the other hand, Nasdaq Futures were last seen posting small daily gains. In case Wall Street’s main indexes push lower heading into the weekend, the USD is likely to continue to outperform its rivals.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the 4-hour chart stays slightly above 30, suggesting that the pair has some more room on the downside before it turns technically oversold. 1.0670 (Fibonacci 78.6% retracement of the latest uptrend) aligns as next support before 1.0600 (psychological level, static level).

In case EUR/USD manages to stabilize above 1.0700 (psychological level, static level), sellers could look to book profits ahead of the weekend and allow the pair to correct higher. In this scenario, 1.0760 (Fibonacci 50% retracement) could be seen as next resistance before 1.0790-1.0800, where the 100-day and the 200-day Simple Moving Averages are located.

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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