- EUR/USD has bounced up from the 1.1300 area and is trading practically flat on daily charts.
- The Dollar loses ground as investors grow cautious with the FOMC minutes on focus
- The Euro is under growing bearish momentum, with 1.1260 support in focus.
EUR/USD has regained lost ground during Wednesday’s European session. The pair found support at the 1.1300 area and returned above 1.1330, with investors trimming US Dollar longs, awaiting the release of the minutes of the Fed’s May meeting.
The US Dollar (USD) had been rallying across the board in previous sessions, supported by a significant recovery in US Consumer Confidence, which had been deteriorating for the previous six months. The survey also revealed that the percentage of Americans expecting a recession in the coming months declined.
These figures offset the decline in April’s US Durable Goods Orders, which highlights the negative impact of US President Donald Trump’s chaotic tariff policy on business and manufacturing.
Beyond that, market sentiment remains buoyed by Trump’s decision to delay levies on Eurozone products. The US Dollar Index (DXY) has bounced about 1% from one-month lows, as fears of a new front in the trade war and its potential impact on global economic growth have eased.
In the Eurozone, US Consumer Confidence data failed to impress, and European Central Bank’s (ECB) member François Villeroy suggested that the bank has more room to cut interest rates. This added negative pressure on the Euro.
Daily digest market movers: The Euro suffers against a firmer US Dollar
- Data from France released on Wednesday showed a weaker-than-expected recovery in Consumer Confidence in April, a 0.3% increase from a 1.1% decline in March, which came short of the market expectations of a 0.8% reading.
- Also in France, the Q1 Gross Domestic Product has confirmed the meagre 0.1% growth previously estimated, with Nonfarm Payrolls declining 0.1% against expectations of a flat reading.
, - In Germany, the Unemployment rate has remained steady at 6.3%, with the net change in employment showing a 34K decline, more than three times the 11K expected. All in all, not the most supportive data for the Euro.
- On Tuesday, the US Conference Board’s Consumer Confidence Index improved to 98.0 in May, up from 85.7 in April. The survey showed improved expectations for income, business conditions, and employment, while fears of a recession in the next 12 months receded.
- US Durable Goods Orders headline figure, on the other hand, declined by 6.3%, on the back of falling aircraft demand. April’s numbers came slightly better than the 7.9% fall anticipated by the market, failing to dent the US Dollar’s recovery.
- The focus today will be on the release of the minutes from the last Federal Reserve (Fed) meeting, which might provide further clues about the central bank’s next monetary policy steps.
Technical analysis: EUR/USD broke trendline support and eyes the 1.1260 level
EUR/USD is correcting lower after last week’s impulsive rally. The pair´s reversal has extended below the bottom of the ascending channel, and bears are eyeing support at 1.1255, the May 22 low, ahead of the May 19 lows at 1.1220.
On the upside, the pair might retest the reverse trendline, now at 1.1345, before extending lower. Above here, the next resistance is located at the May 27 and 26 highs,1.1400 and 1.1420, respectively.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.04% | 0.06% | -0.06% | 0.06% | 0.05% | -0.35% | 0.03% | |
| EUR | -0.04% | 0.05% | -0.05% | 0.02% | 0.01% | -0.36% | 0.03% | |
| GBP | -0.06% | -0.05% | -0.10% | 0.02% | -0.02% | -0.07% | -0.00% | |
| JPY | 0.06% | 0.05% | 0.10% | 0.10% | 0.08% | -0.27% | 0.16% | |
| CAD | -0.06% | -0.02% | -0.02% | -0.10% | -0.00% | -0.36% | -0.02% | |
| AUD | -0.05% | -0.01% | 0.02% | -0.08% | 0.00% | -0.04% | 0.02% | |
| NZD | 0.35% | 0.36% | 0.07% | 0.27% | 0.36% | 0.04% | 0.05% | |
| CHF | -0.03% | -0.03% | 0.00% | -0.16% | 0.02% | -0.02% | -0.05% |
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).
EUR/USD 4-Hour Chart
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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