EUR/USD is trading with moderate gains, right above 1.1750 at the time of writing on Thursday, but still trapped within a tight range below 1.1760. The US Dollar’s weakness amid rising bets of back-to-back Federal Reserve (Fed ) interest rate cuts has offset the impact of an unexpected increase in the Eurozone’s unemployment rate.
Data released by Eurostat earlier on Thursday revealed that the rate of unemployed workers in the countries sharing the Euro rose to 6.3% in August, up from July’s 6.2% and against market expectations of a seady 6.2% reading.
The Euro, however, has remained little changed following the release. The common currency remains buoyed by US Dollar’s weakness, after the US ADP Employment Change showed an unexpected decline in September, adding pressure on the Fed to lower interest rates further over the upcoming months.
With the US government closed amid a budget standoff, the Labor Department will not release the US jobless payrolls report, and, most likely, neither Friday’s key Nonfarm Payrolls. In Europe, August’s Unemployment Rate is the only event worth mentioning, while in the US, the Challenger Job Cuts could gather particular interest.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | -0.18% | -0.25% | 0.00% | -0.08% | -0.49% | -0.21% | |
| EUR | 0.23% | 0.04% | -0.02% | 0.22% | 0.14% | -0.15% | 0.00% | |
| GBP | 0.18% | -0.04% | -0.04% | 0.15% | 0.13% | -0.17% | -0.01% | |
| JPY | 0.25% | 0.02% | 0.04% | 0.23% | 0.15% | -0.35% | 0.07% | |
| CAD | -0.00% | -0.22% | -0.15% | -0.23% | -0.09% | -0.34% | -0.20% | |
| AUD | 0.08% | -0.14% | -0.13% | -0.15% | 0.09% | -0.35% | -0.13% | |
| NZD | 0.49% | 0.15% | 0.17% | 0.35% | 0.34% | 0.35% | 0.32% | |
| CHF | 0.21% | -0.01% | 0.01% | -0.07% | 0.20% | 0.13% | -0.32% |
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: FX markets remain rangebound in the absence of US data
- The Euro Dollar remains trading within a 50-pip range above 1.1710. Recent Eurozone data have not been particularly supportive, and the US Dollar remains steady despite the downbeat employment figures and rising bets of Fed rate cuts. Investors seem to be wary of taking excessive risks, awaiting developments from the US regarding the government shutdown.
- The Governour of the Bank of Latvia and ECB committee member, Martins Khazaks, reiterated that the bank’s interest rates are at a “very appropriate level” and that they should remain unchanged unless further shocks force to change them.
- On Wednesday, the US Supreme Court dismissed US President Donald Trump’s order to fire Federal Reserve Governor Lisa Cook and allowed her to remain in her position at least until January, when the court is expected to hear Trump’s arguments. This sentence backs the Fed’s independence and represents a significant setback to the president’s attempts to control the central bank.
- US economic data, however, continues to point to further monetary easing. Wednesday’s ADP employment report revealed a net loss of 32K jobs in September, against expectations of a 50K increase. Beyond that, August reading was revised to a 3K decline from the 54K rise previously estimated, adding to evidence that the US labor market is deteriorating sharply.
- September’s US ISM Manufacturing Purchasing Managers Index showed that business activity improved to 49.1 from 48.7 in August. The final data beat estimates of a 49.0 reading, but new orders declined to 48.9 from 51.4, and employment contracted at a 45.3 level, easing the optimism about the headline reading.
- Recent data and the US government shutdown have prompted traders to increase their bets on immediate Fed rate cuts. Chances of a quarter-point easing in October are practically fully priced, with a 99% chance according to the CME Group’s FedWatch tool, while the odds for another such cut in December have increased to 86%, from 60% one week ago.
- In Europe, September’s preliminary Harmonized Index of Consumer Prices (HICP) confirmed expectations of an acceleration to a 2.2% year-on-year rate, from 2% in August, while the core reading continued to grow at a steady 2.3% yearly rate.
Technical Analysis: EUR/USD resistances at 1.1760 and 1.1795 keep holding bulls
EUR/USD immediate bias remains bullish, but technical indicators point to a weakening momentum, as bulls remain capped below the broken trendline. The 4-hour chart Relative Strength Index (RSI) at 55 is close to the 50 neutral level, and the Moving Average Convergence Divergence (MACD) is crossing below the signal line.
Bulls were rejected at the 1.1780 area on Wednesday, a few pips below the mentioned reverse trendline, now around 1.1795. A successful break of that level is needed to cancel the broader bearish trend from mid-September highs and shift the focus towards the September 23 and 24 highs, near 1.1820.
To the downside, immediate support is at the 1.1710-1.1715 area, which contained bears on Tuesday and Wednesday. Further down, last week’s lows at the 1.1645-1.1655 area and the September 2 and 3 lows, near 1.1610, would come into focus.
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.
