EUR/USD picks up from lows in a calm year-end session
- EUR/USD returns to levels past 1.1750 after hitting lows at 1.1720
- The minutes of the December Fed meeting provided some support for the US Dollar.
- The pair has broken below trendline support, a negative sign.
EUR/USD has turned positive on the daily chart on Wednesday. The pair found support at 1.1720 during the European morning session, and is trading at levels right above 1.1750 heading into the US session opening. The US Dollar recovery has lost steam, with US Jobless Claims expected to add some spice to a dozy year-end trading session.
From a wider perspective, however, the common currency remains on track to a 14% yearly appreciation, boosted by the monetary policy divergence between the European Central Bank (ECB) and the Fed. Apart from that, US President Donald Trump's erratic trade policies and the softening US economy have weighed heavily on the Greenback.
On Tuesday, the FOMC's minutes confirmed the wide divergence among Fed policymakers. The monetary policy committee approved a 25 basis points rate cut by a lower margin than previously thought and conditioned further monetary policy easing to a steady decline of inflation, which casts doubts about the timing of the next interest rate cut. The US Dollar appreciated after the release of the minutes.
In the macroeconomic calendar, the release of the US Initial Jobless Claims will gather investors' attention. Still, volumes are likely to remain at thin levels as most markets will be closed on Thursday amid the New Year festivities and with Japanese markets shut for the rest of the week.
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 | 0.12% | 0.21% | 0.08% | 0.06% | 0.16% | 0.40% | 0.16% | |
| EUR | -0.12% | 0.11% | -0.04% | -0.06% | 0.04% | 0.28% | 0.05% | |
| GBP | -0.21% | -0.11% | -0.13% | -0.15% | -0.05% | 0.18% | -0.04% | |
| JPY | -0.08% | 0.04% | 0.13% | -0.00% | 0.08% | 0.32% | 0.11% | |
| CAD | -0.06% | 0.06% | 0.15% | 0.00% | 0.09% | 0.30% | 0.11% | |
| AUD | -0.16% | -0.04% | 0.05% | -0.08% | -0.09% | 0.24% | 0.01% | |
| NZD | -0.40% | -0.28% | -0.18% | -0.32% | -0.30% | -0.24% | -0.22% | |
| CHF | -0.16% | -0.05% | 0.04% | -0.11% | -0.11% | -0.01% | 0.22% |
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: Fed minutes provided some support to the US Dollar
- The Euro accelerated its pullback on Tuesday as the minutes of December's Fed meeting cast doubt on the date of the next interest rate cut. The US Dollar, however, is set to close its worst yearly performance in the last eight years.
- The Dollar Index (DXY), which measures the value of the USD against a basket of six currencies, has depreciated nearly 10% in the last 12 months.
- The minutes of the December 9-10 Fed Monetary Policy Meeting confirmed that the decision to cut rates by a quarter-point was approved by 9 votes against 3, the highest number of dissenters in the last six years. The divergence within the monetary policy committee reflects the challenging task of setting monetary policy to support a deteriorating labour market without boosting the already strong inflationary pressures.
- The minutes also revealed that most committee members judged that further rate cuts would likely be appropriate if inflation declined in line with the central bank's projections, and signalled one rate cut in 2026 and another one in 2027.
- On Wednesday, the focus will turn to the weekly US Jobless Claims report, which is expected to show that first-time applications for unemployment benefits rose to 220K in the week of December 26 from 214K on the previous one.
Technical Analysis: EUR/USD is likely to find resistance at the reverse trendline
The EUR/USD is showing a mild recovery at the time of writing, yet with technical indicators still at negative levels. The 4-hour Relative Strength Index (RSI) has bounced up from lows near oversold territory but remains below the key 50 line, while the Moving Average Convergence Divergence (MACD) shows an easing bearish momentum, yet still below zero.
To the upside, the reverse trendline, now around 1.1770, is likely to pose a significant resistance in case of a bullish reversal. This level closes the path towards the December 16 and 24 highs near 1.1805 area, and the September 23 and 24 highs near 1.1820.
A bearish reversal, on the contrary, is likely to face support at the December 17 and 19 lows near 1.1700. Further down, the next targets are the December 4 high and December 11 low, around 1.1680, ahead of the December 8 and 9 lows in the area of 1.1615.
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.