EUR/USD is posting minor gains on Friday, trading at 1.1575 at the time of writing after hitting fresh two-month lows near 1.1540 the previous day. The common currency has lost over 1.4% so far this week and is on track for its worst weekly performance this year, undermined by the uncertain political and fiscal situation in France.
The French Prime Minister (PM), Sébastien Lecornu, resigned unexpectedly earlier this week, and the market is awaiting President Emmanuel Macron to appoint a new one. The next PM will face the challenging task of approving a tightening budget, amid fierce opposition within the parliament, which has led to the ousting of his five predecessors in less than two years.
The US Dollar (USD), on the other hand, is drawing support from concerns about France and similar worries in Japan, as the pro-stimulus new President of the Liberal Democratic Party Sanae Takaichi emerges as the likely next Prime Minister. With the release of most US economic indicators delayed due to the US government shutdown, recent dovish comments from Fed policymakers have failed to dent USD strength.
In the economic calendar on Friday, Italy’s Industrial Output data for August will be the only event worth mentioning in Europe, while in the US, the University of Michigan Consumer Sentiment is expected to show a further deterioration in October
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | -0.04% | -0.05% | -0.04% | -0.15% | 0.09% | -0.13% | |
| EUR | 0.04% | 0.03% | -0.09% | -0.01% | -0.07% | -0.10% | -0.00% | |
| GBP | 0.04% | -0.03% | -0.08% | -0.08% | -0.11% | 0.08% | -0.08% | |
| JPY | 0.05% | 0.09% | 0.08% | 0.12% | -0.02% | 0.16% | 0.03% | |
| CAD | 0.04% | 0.01% | 0.08% | -0.12% | -0.16% | 0.11% | -0.01% | |
| AUD | 0.15% | 0.07% | 0.11% | 0.02% | 0.16% | 0.21% | 0.02% | |
| NZD | -0.09% | 0.10% | -0.08% | -0.16% | -0.11% | -0.21% | -0.18% | |
| CHF | 0.13% | 0.00% | 0.08% | -0.03% | 0.00% | -0.02% | 0.18% |
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: US Dollar reigns amid political uncertainty
- The US Dollar has outperformed its peers this week. The USD Index (DXY), which measures the value of the Dollar against six major currencies, has rallied nearly 1.7% this week so far and is set for its best weekly performance in the year to date. The political impasse in France and concerns that the new Japanese cabinet might hamper the Bank of Japan’s (BoJ) tightening plans have triggered a rush for safety this week, boosting speculative demand for the Greenback.
- In France, President Macron is expected to name his sixth Prime Minister within the next 24 hours, to avert the opposition’s demands for parliamentary elections. The market, however, remains sceptical about his chances of approving a new budget, amid a deeply divided parliament.
- On Thursday, the European Central Bank’s September Monetary Policy Meeting Accounts revealed an increasing concern about the uncertain global context, although policymakers considered that there is no immediate pressure to change the bank’s policy. Regarding inflation, the committee has shown some divergence, with some members observing upside risks while others see price pressures abating. The impact of the accounts on the Euro was marginal.
- In the US, the New York Federal Reserve (Fed) President, John Williams, affirmed that he is open to cutting interest rates further, as the deteriorating labour market warrants attention. Meanwhile, Governor Michael Barr called for a cautious approach to monetary easing as tariffs could cause persistent inflation.
- Later on Friday, the preliminary US University of Michigan Consumer Sentiment Index will provide one of the few data releases since the government’s shutdown. The survey is expected to show a further deterioration in consumers’ confidence, with the index dropping for the third consecutive month to 54.2 in October from September’s 55.1.
Technical Analysis: EUR/USD is under pressure at two-month lows below 1.1600
EUR/USD broke a key support area at 1.1600 on Thursday, dropping to fresh two-month lows and highlighting the strong bearish momentum. Technical indicators are pointing lower, with the Relative Strength Index (RSI) on the 4-hour chart low but still above oversold levels. In these conditions, rallies look likely to attract sellers.
To the upside, the pair might find resistance at the previous support area right near 1.1575 (August 27 low) followed by Wednesday’s low, right above 1.1600. Further up, the September 25 low and October 9 high, in the area of 1.1650, will come into focus.
Immediate support is at the descending channel bottom, as seen on the 4-hour chart since mid-September, and Thursday’s low near 1.1540. Further down, the August 5 low, near 1.1525, would be the last support area ahead of the August 1 low, at 1.1395.
Euro FAQs
The Euro is the currency for the 19 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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