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20
05, 2024
Bullish potential intact ahead of Fedspeak
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- EUR/USD fluctuates in a tight range below 1.0900 early Monday.
- The technical picture suggests that the near-term bullish bias remains unchanged.
- 1.0890-1.0900 region aligns as immediate resistance for the pair.
EUR/USD stays relatively calm and trades in a narrow band below 1.0900 in the early European morning on Monday. The pair’s technical outlook suggests that the bullish bias remains intact in the near term.
EUR/USD rose nearly 1% last week and registered gains for the fifth consecutive week. Macroeconomic data releases from the US, including consumer and producer inflation figures for April, revived expectations about a Federal Reserve (Fed) rate cut in September and made it difficult for the US Dollar to stay resilient against its rivals.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.03% | -1.41% | 0.00% | -0.45% | -1.41% | -1.69% | 0.28% | |
| EUR | 1.03% | -0.43% | 1.02% | 0.56% | -0.42% | -0.69% | 1.30% | |
| GBP | 1.41% | 0.43% | 1.38% | 0.99% | 0.02% | -0.25% | 1.75% | |
| JPY | 0.00% | -1.02% | -1.38% | -0.47% | -1.38% | -1.74% | 0.31% | |
| CAD | 0.45% | -0.56% | -0.99% | 0.47% | -0.95% | -1.26% | 0.65% | |
| AUD | 1.41% | 0.42% | -0.02% | 1.38% | 0.95% | -0.37% | 1.73% | |
| NZD | 1.69% | 0.69% | 0.25% | 1.74% | 1.26% | 0.37% | 2.00% | |
| CHF | -0.28% | -1.30% | -1.75% | -0.31% | -0.65% | -1.73% | -2.00% |
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).
Monday’s economic docket will not feature any high-tier data releases. In the second half of the day, Atlanta Fed President Raphael Bostic, Fed Governor Christopher Waller and Fed Vice Chair Phillip Jefferson will be delivering speeches.
In case Fed officials overlook April inflation figures and reiterate the need to see consecutive favorable inflation data for several months before gaining enough confidence to consider a policy pivot, the USD could find a foothold and make it difficult for EUR/USD to extend its uptrend.
Meanwhile, investors will also keep a close eye on risk sentiment. Early Monday, US stock index futures trade modestly higher. A negative shift in risk sentiment, highlighted by a bearish opening in Wall Street, could support the USD and cause EUR/USD to correct lower in the American session.
EUR/USD Technical Analysis
EUR/USD continues to trade within the ascending regression channel coming from mid-April and the Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60, reflecting the bullish bias.
On the upside, key resistance aligns at 1.0890-1.0900, where the Fibonacci 78.6% retracement of the latest downtrend meets the upper limit of the ascending channel. In case EUR/USD rises above that area and confirms it as support, it could target 1.0940 (static level) and 1.0965 (beginning point of the downtrend).
The 20-period Simple Moving Average (SMA) on the 4-hour chart forms dynamic support at 1.0865 before 1.0830 (Fibonacci 61.8% retracement) and 1.0810-1.0800 (50-period SMA, lower limit of the ascending channel).
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 range below 1.0900 early Monday.
- The technical picture suggests that the near-term bullish bias remains unchanged.
- 1.0890-1.0900 region aligns as immediate resistance for the pair.
EUR/USD stays relatively calm and trades in a narrow band below 1.0900 in the early European morning on Monday. The pair’s technical outlook suggests that the bullish bias remains intact in the near term.
EUR/USD rose nearly 1% last week and registered gains for the fifth consecutive week. Macroeconomic data releases from the US, including consumer and producer inflation figures for April, revived expectations about a Federal Reserve (Fed) rate cut in September and made it difficult for the US Dollar to stay resilient against its rivals.
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 Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.03% | -1.41% | 0.00% | -0.45% | -1.41% | -1.69% | 0.28% | |
| EUR | 1.03% | -0.43% | 1.02% | 0.56% | -0.42% | -0.69% | 1.30% | |
| GBP | 1.41% | 0.43% | 1.38% | 0.99% | 0.02% | -0.25% | 1.75% | |
| JPY | 0.00% | -1.02% | -1.38% | -0.47% | -1.38% | -1.74% | 0.31% | |
| CAD | 0.45% | -0.56% | -0.99% | 0.47% | -0.95% | -1.26% | 0.65% | |
| AUD | 1.41% | 0.42% | -0.02% | 1.38% | 0.95% | -0.37% | 1.73% | |
| NZD | 1.69% | 0.69% | 0.25% | 1.74% | 1.26% | 0.37% | 2.00% | |
| CHF | -0.28% | -1.30% | -1.75% | -0.31% | -0.65% | -1.73% | -2.00% |
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).
Monday’s economic docket will not feature any high-tier data releases. In the second half of the day, Atlanta Fed President Raphael Bostic, Fed Governor Christopher Waller and Fed Vice Chair Phillip Jefferson will be delivering speeches.
In case Fed officials overlook April inflation figures and reiterate the need to see consecutive favorable inflation data for several months before gaining enough confidence to consider a policy pivot, the USD could find a foothold and make it difficult for EUR/USD to extend its uptrend.
Meanwhile, investors will also keep a close eye on risk sentiment. Early Monday, US stock index futures trade modestly higher. A negative shift in risk sentiment, highlighted by a bearish opening in Wall Street, could support the USD and cause EUR/USD to correct lower in the American session.
EUR/USD Technical Analysis
EUR/USD continues to trade within the ascending regression channel coming from mid-April and the Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60, reflecting the bullish bias.
On the upside, key resistance aligns at 1.0890-1.0900, where the Fibonacci 78.6% retracement of the latest downtrend meets the upper limit of the ascending channel. In case EUR/USD rises above that area and confirms it as support, it could target 1.0940 (static level) and 1.0965 (beginning point of the downtrend).
The 20-period Simple Moving Average (SMA) on the 4-hour chart forms dynamic support at 1.0865 before 1.0830 (Fibonacci 61.8% retracement) and 1.0810-1.0800 (50-period SMA, lower limit of the ascending channel).
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.
