EUR/USD drifts lower with markets on standby ahead of Ukraine's summit
- The Euro depreciates, US Dollar firms up, with markets cautious ahead of the Trump-Zelenskyy summit in the White House.
- Trump is expected to pressure Zelenskyy to accept Putin's requirements for a peace deal in Ukraine.
- Later this week, the speeches by ECB's Lagarde and Fed's Powell will be the main fundamental highlights.
The EUR/USD is trimming some gains, retreating from levels beyond 1.1700 to 1.1680 on Monday's European session. The US Dollar is picking up against most peers in a mild risk-off environment, ahead of a meeting between United States (US) President Donald Trump and his Ukrainian counterpart Volodymyr Zelenskyy, who will be joined by several European leaders, and whose positions on the conditions for a peace deal in Ukraine seem far apart.
Media reports suggest that Trump will try to obtain a quick deal by pushing Zelenskyy to accept most of the requirements posted by Putin in Alaska. This would mainly involve giving up all the territory taken by Russia, a proposal the Ukrainian president has rejected in previous times and which is unlikely to find support among European leaders.
The calendar is void in the Eurozone and the US on Monday, and the focus will be on European Central Bank President Christine Lagarde's speech on Wednesday and, above all, on Fed Chairman Jerome Powell's speech on Friday. In light of the recent macroeconomic data, the risk is on a too-hawkish Powell, who might dampen hopes of a Federal Reserve (Fed) rate cut in September that is widely expected by the market.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.25% | 0.01% | 0.09% | -0.16% | -0.11% | -0.28% | 0.20% | |
| EUR | -0.25% | -0.24% | -0.19% | -0.41% | -0.35% | -0.56% | -0.05% | |
| GBP | -0.01% | 0.24% | -0.04% | -0.17% | -0.10% | -0.32% | 0.15% | |
| JPY | -0.09% | 0.19% | 0.04% | -0.22% | -0.17% | -0.33% | 0.11% | |
| CAD | 0.16% | 0.41% | 0.17% | 0.22% | 0.02% | -0.12% | 0.32% | |
| AUD | 0.11% | 0.35% | 0.10% | 0.17% | -0.02% | -0.21% | 0.26% | |
| NZD | 0.28% | 0.56% | 0.32% | 0.33% | 0.12% | 0.21% | 0.44% | |
| CHF | -0.20% | 0.05% | -0.15% | -0.11% | -0.32% | -0.26% | -0.44% |
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: Traders in "wait-and-see" mode ahead of Ukraine's summit
- FX markets have been practically flat in the Asian Session, and they seem to remain that way in Europe. In the absence of key macroeconomic releases, all eyes are on a Trump-Zelenskyy meeting, which, right now, looks very unlikely to deliver significant progress on a steady peace agreement.
- The secondary focus this week will be on monetary policy, especially on Fed Powell's speech at the Jackson Hole Symposium due on Friday. The strong inflation and Retail Sales data seen last week have offset the impact of the weak labour figures previously released. This might add reasons for Powell to maintain his hawkish stance, warning about the inflationary impact of tariffs and putting September's rate cut into question.
- US data released on Friday showed that Retail sales grew at a 0.5% pace in July, as expected, following a 0.9% growth in June. Excluding automobiles, sales of all other products increased by 0.3%, following a 0.8% increment in the previous month, all in all numbers pointing to a resilient consumption and a healthy economic growth.
- These figures follow a larger-than-expected increase in producer inflation, reported earlier last week, which resurfaced concerns about the impact of Trump's tariffs and wiped out hopes of a 50 basis point cut after the summer, which had been suggested by US Treasury Secretary Scott Besent.
- In Europe, ECB President Christine Lagarde might speak about monetary policy at the World Economic Forum in Geneva on Wednesday. She is highly likely to stick to the "meeting by meeting" stance, but any hint at the end of the easing cycle will be taken as hawkish.
Technical Analysis: EUR/USD is hovering below trendline resistance at 1.1725
The EUR/USD pair maintains its positive bias from early August loss at 1.1400 intact, yet with bullish momentum fading right below a key resistance level, at the 1.1725-1.1735 area, where the trend resistance from July 1 highs meets the August 13 high. The 4-hour Relative Strength Index (RSI) is turning lower, but still at positive levels, and the MACD shows a lack of clear bias with traders awaiting the outcome of the Ukraine summit to take investment decisions.
To the downside, immediate support lies at the August 14 low of 1.1635 ahead of the 1.1590 area, which broadly aligns with the August 11 low and August 4 high. Further down, bears might be attracted by the August 5 low at around 1.1530. A bullish reaction above 1.1735, on the contrary, is likely to lure bulls into the July 24 high at 1.1789 ahead of the July 1 high at 1.1830.
Euro FAQs
The Euro is the currency for the 19 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.