EUR/USD has retraced previous losses during Friday’s European session and returned to 1.1550 at the time of writing after bottoming at 1.1530 earlier on the day. Markets, however, are lacking a clear direction, and the pair is on track for a flat weekly performance, with Eurozone data showing mixed figures and investors flying blind due to the ongoing blackout of official US data.
The US Dollar Index (DXY), which measures the value of the USD against a basket of six majors, has given away gains, turning negative on daily charts, which is providing some support to the common currency. Investors, however, remain wary of risk following another sell-off on Wall Street on Thursday, which might weigh on EUR/USD rallies.
On Thursday, a private employment report revealed that net employment declined in the US in October, offsetting the moderate enthusiasm seen after Wednesday’s ADP data release and feeding hopes of a Federal Reserve (Fed) rate cut in December. The US Dollar extended its pullback from three-month highs.
On Friday’s calendar, the focus will be on European Central Bank (ECB) and Fed speakers, ahead of the Michigan Consumer Sentiment Index, as the US government shutdown will delay the key Nonfarm Payrolls (NFP) report for the second consecutive month.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.04% | 0.21% | 0.09% | -0.01% | 0.02% | 0.39% | 0.02% | |
| EUR | 0.04% | 0.25% | 0.16% | 0.02% | 0.05% | 0.42% | 0.06% | |
| GBP | -0.21% | -0.25% | -0.12% | -0.25% | -0.20% | 0.18% | -0.19% | |
| JPY | -0.09% | -0.16% | 0.12% | -0.08% | -0.06% | 0.29% | -0.06% | |
| CAD | 0.01% | -0.02% | 0.25% | 0.08% | 0.02% | 0.37% | 0.03% | |
| AUD | -0.02% | -0.05% | 0.20% | 0.06% | -0.02% | 0.38% | 0.03% | |
| NZD | -0.39% | -0.42% | -0.18% | -0.29% | -0.37% | -0.38% | -0.36% | |
| CHF | -0.02% | -0.06% | 0.19% | 0.06% | -0.03% | -0.03% | 0.36% |
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: Choppy trading amid cautious markets
- Investors’ fears about an overvaluation of AI-related fears are bringing memories of the dotcom crash and have sent equity markets tumbling across the board. Risk-aversion boosted the US Dollar earlier on Monday, but the absence of official US Data is keeping limiting the US Dollar’s rallies, leaving most pairs in no man’s land.
- A report by Revelio Public Labor Statistics showed that net employment declined by 9,100 in October, with public sector jobs dropping from 22,000. Apart from that, cost-cutting and the adoption of artificial intelligence have increased plans for further layoffs.
- These figures boosted hopes of another Fed interest-rate cut in December. The CME Fed Watch Tool shows that chances of a quarter-point cut in December increased to 67% from 62% on Thursday. Still, these are below the levels above 90% seen ahead of last week’s Fed meeting.
- Chicago Fed President Austan Goolsbee cooled those hopes, showing hesitation about easing monetary policy further in the absence of key inflation data amid the US government shutdown.
- In Europe, an unexpected contraction in Retail Sales in September offset the optimism after the upbeat services sector activity figures released earlier in the week and acted as headwind for the Euro recovery.
- Data released by Destatis on Friday has shown that the German trade surplus narrowed to EUR 15.3 billion in September, well below the EUR 16.8 billion expected after a downwardly revised EUR 16.9 billion surplus in August. The rise in exports has been offset by a larger increase in imports.
Technical Analysis: EUR/USD must break 1.1550 to confirm a trend shift
The EUR/USD has resumed the upside trend from three-month lows and has pierced a key resistance in the 1.1545-1.1550 area (October 14, 30 lows). Technical indicators are showing an increasing bullish momentum, although the fundamental background, with risk-aversion prevailing, is not the best context for a sharp Euro recovery
Thursday’s impulsive rebound suggests that negative momentum might be easing. Still, Euro bulls should confirm above 1.1550 to signal a trend shift and set their target at 1.1580 (October 22, 23 lows) ahead of 1.1635, the October 30 high.
Meanwhile, downside attempts are limited at the 1.1530 area. Further down, the pair might find some support at 1.1500 and then at the November 5 low around 1.1470. The measured target of the broken triangle pattern, which meets the price at the 261.8% Fibonacci retracement of the late October rally, is near 1.1440.
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022.
Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact 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 when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
