EUR/USD Forecast and News
EUR/USD reaches for 1.0900, easing US CPI inflation pummels Greenback
EUR/USD climbed on Wednesday in one of the pair’s single-best days of 2024, climbing towards 1.0900 and on pace to etch in a fourth consecutive gain week. Broad-market selling pressure deflated the US Dollar after risk appetite roared to the forefront after US CPI inflation eased more than investors expected.
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EUR/USD Technical Overview
On the upside, EUR/USD is now projected to encounter first resistance at the April high of 1.0885 (April 9), seconded by the March top of 1.0981 (March 8), and the weekly peak of 1.0998 (January 11), all before the psychological 1.1000 level.
In the other direction, a break below the May low of 1.0649 (May 1) might bring the 2024 bottom of 1.0601 (April 16) back into focus, followed by the November 2023 low of 1.0516 (November 1). Once this zone is passed, the pair may target the weekly low of 1.0495 (October 13, 2023), then the 2023 bottom of 1.0448 (October 3) and the 1.0400 round milestone.
So far, the 4-hour chart shows a consistent upward trend. Against this, there is an instant uphill challenge at 1.0885 followed by 1.0942. Meanwhile, the initial contention emerges at 1.0766, followed by 1.0723. The relative strength index (RSI) climbed beyond 81.
Fundamental Overview
The ongoing negativity surrounding the US Dollar (USD) spurred yet another positive response in EUR/USD, this time lifting it to surpass five-week highs near the 1.0900 barrier on Wednesday.
The intense decline in the Dollar coincided with a generally negative session in US yields across various durations, all exacerbated after US inflation data tracked by the CPI showed another downtick in consumer prices in April.
This scenario continues to anticipate the Federal Reserve (Fed) embarking on its easing cycle in September, in contrast to a potential earlier onset of interest rate cuts by the European Central Bank (ECB), likely in June.
Regarding the latter, the CME Group’s FedWatch Tool indicates a 70% probability of lower interest rates in the US by September.
This idea was reinforced after Federal Reserve Chief Jerome Powell expressed his expectation of US inflation continuing to decrease through 2024, echoing last year's trend. He also indicated that it seemed unlikely for the Fed to implement further interest rate hikes.
Somewhat in contrast to Powell’s views, Minneapolis Federal Reserve Bank President Neel Kashkari reiterated on Wednesday his uncertainty regarding the level of restrictiveness in current monetary policy. He emphasized that borrowing costs "probably need to remain at their current level for a while" as US central bankers assess inflation.
Meanwhile, the unchanged monetary policy landscape underscores the divergence between the Federal Reserve and other G10 central banks, particularly the European Central Bank (ECB).
Regarding the ECB, recent statements from policymakers have suggested an increasing likelihood of the bank initiating its easing process in June, although uncertainties remain about the ECB’s future decisions beyond the summer. In this regard, de Guindos mentioned earlier on Thursday that the ECB exercises caution in predicting any trends beyond June.
Looking ahead, the relatively subdued economic fundamentals in the Eurozone, combined with the resilience of the US economy, support the ongoing Fed-ECB policy divergence narrative and favour a stronger Dollar in the longer term, especially given the growing probability of the ECB reducing rates well before the Fed.
Considering this perspective, the potential for further weakness in EUR/USD should be considered in the medium term.
SPECIAL WEEKLY FORECAST
Interested in weekly EUR/USD forecast? Our experts make weekly updates forecasting the next possible moves of the Euro-US Dollar pair. Here you can find the most recent forecast by our market experts:
EUR/USD: A better mood puts pressure on the US Dollar Premium
The EUR/USD pair seesawed in a tight range just above the 1.0700 threshold for most of the week, with the US Dollar (USD) finally giving up and extending its slide while heading into the weekly close.
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EUR/USD reaches for 1.0900, easing US CPI inflation pummels Greenback
EUR/USD climbed on Wednesday in one of the pair’s single-best days of 2024, climbing towards 1.0900 and on pace to etch in a fourth consecutive gain week. Broad-market selling pressure deflated the US Dollar after risk appetite roared to the forefront after US CPI inflation eased more than investors expected.
GBP/USD extends its upside above 1.2680 on weaker US Dollar
The GBP/USD pair extends its upside near 1.2688 on Thursday during the early Asian session. The uptick of the major pair is supported by the weaker Greenback after the release of softer US CPI inflation data.
USD/JPY trims losses below 154.50 following Japan’s GDP data
USD/JPY trims losses near 154.45 during the early Asian session on Thursday. The softer US CPI inflation data has exerted some selling pressure on the US Dollar. However, the major pair recovers modestly following the recent weaker-than-expected Japan’s Gross Domestic Product in the first quarter of 2024.
Gold rally continues with buyers eyeing $2,400 as inflation recedes
Gold price extended its uptrend for the second straight day on Wednesday and hit a three-week high of $2,390 after data revealed by the US Bureau of Labor Statistics showed inflation is ebbing, increasing the odds for a Federal Reserve rate cut in 2024.
Oil sinks while the Greenback retreats on softer CPI print
Oil breaks below $78.00 after both OPEC and IEA released their monthly reports. While OPEC stuck to previous expectations, sluggish demand is forecasted in the IEA release. The US Dollar Index eases ahead of the US CPI print.
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EUR/USD Yearly forecast
How could EUR/USD move this year? Our experts make a EUR/USD update forecasting the possible moves of the euro-dollar pair during the whole year. Don't miss our 2024 EUR/USD forecast!
EUR/USD FORECAST 2024
In the EURUSD 2024 Forecast, our analyst, Valeria Bednarik, anticipates gains for the next couple of months. The Eurozone economy would need to show steady signs of recovery to prevent EUR/USD from collapsing below 1.0390 in the year's second half. Read more details about the forecast.
The pair traded as low as 1.0447 and as high as 1.1275 throughout 2023, with currencies moving on sentiment.
MOST INFLUENTIAL POLITICAL EVENTS IN 2024 FOR EUR/USD
There is a note of color that would stand out in the upcoming months: the US 2024 presidential election that will take place on November 5. The contest nomination will start as soon as January and run until June. The pinch of drama comes from Donald Trump’s desire to represent Republicans once again. A potential second government of Donald Trump could mean higher inflationary pressures as Trump could reintroduce tariffs on imports and push against the agreements between China and the Biden administration.
Influential Institutions & People for the EUR/USD
The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:
The European Central Bank (ECB)
The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Christine Lagarde is the President of this organism.
ECB Official Website, on Twitter and YouTube
The Federal Reserve Bank (Fed)
On the other
FED Official Website, on Twitter and Facebook
Christine Lagarde
Christine Lagarde was born in 1956 in Paris, France. Graduated from Paris West University Nanterre La Défense and became President of the European Central Bank in November 1st 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007–2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005–2007).
Lagarde on ECB'S Profile and Wikipedia
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
ECB NEWS & ANALYSIS
FED NEWS & ANALYSIS
About EUR/USD
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.
Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EUR/USD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.
Related pairs
GBP/USD
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.
The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.
USD/JPY
The USD/JPY (or US Dollar Japanese Yen) currency pair is one of the 'Majors', the most important pairs in the world. Japanese Yen has a low interest rate, normally used in carry trades, that's why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.
Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.