- EUR/USD holds steady near 1.0850 after closing in the green on Monday.
- Euro could face resistance at 1.0860 before targeting 1.0890-1.0900.
- Improving risk mood could help the pair stretch higher.
EUR/USD fluctuates at around 1.0850 in the early European session on Tuesday after closing in positive territory on Monday. Improving risk mood could make it difficult for the US Dollar (USD) to find demand and help the pair extend its recovery in the near term.
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 | CAD | AUD | JPY | NZD | CHF | |
| USD | -0.36% | -0.41% | -0.23% | -0.44% | 0.00% | -0.46% | 0.30% | |
| EUR | 0.37% | -0.05% | 0.15% | -0.05% | 0.35% | -0.03% | 0.66% | |
| GBP | 0.41% | 0.05% | 0.20% | 0.00% | 0.41% | 0.02% | 0.71% | |
| CAD | 0.22% | -0.14% | -0.19% | -0.21% | 0.21% | -0.18% | 0.51% | |
| AUD | 0.43% | 0.06% | 0.02% | 0.20% | 0.41% | -0.02% | 0.72% | |
| JPY | 0.00% | -0.34% | -0.31% | -0.19% | -0.38% | -0.40% | 0.32% | |
| NZD | 0.39% | 0.07% | 0.03% | 0.22% | 0.02% | 0.42% | 0.73% | |
| CHF | -0.29% | -0.66% | -0.71% | -0.51% | -0.71% | -0.31% | -0.69% |
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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The modest selling pressure surrounding the USD allowed EUR/USD to gain traction at the beginning of the week.
Federal Reserve Bank of Chicago President Austan Goolsbee said on Monday that three rate cuts in 2024 is in line with his thinking. Commenting on the policy outlook, "there are risks to easing policy too much or too soon, as well as too late," Fed Governor Lisa Cook said. These mixed comments failed to trigger a noticeable market reaction.
Later in the day, the US Census Bureau will release Durable Goods Orders data for February. Investors expect an increase of 1.3% following the 6.2% contraction recorded in January. Although the initial reaction to an upbeat reading could support the USD, the currency's gains could remain limited unless there is a negative shift in risk mood.
In the early European session, US stock index futures are up between 0.2% and 0.4%. A bullish opening in Wall Street could open the door for EUR/USD to stretch higher.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart recovered to 50, reflecting a loss of bearish momentum. On the upside, 1.0860 (Fibonacci 38.2% retracement of the latest uptrend) aligns as first resistance before 1.0890-1.0900, where the 100-period Simple Moving Average (SMA) and the Fibonacci 23.6% retracement level align.
Immediate support is located at 1.0840-1.0830 (200-period SMA, Fibonacci 50% retracement) ahead of 1.0800 (Fibonacci 61.8% retracement).
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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