EUR/USD turns lower and trades below 1.1620 at the time of writing, drawing closer to the 1.1600 support area, after being capped around 1.1650 at the European session opening on Thursday. Euro’s (EUR) upside attempts remain frail, as France’s political uncertainty keeps investors on their toes.
France’s outgoing Prime Minister (PM) Sébastien Lecornu calmed markets on Wednesday, stating that President Emmanuel Macron would announce a new PM in the next 48 hours and dismissing the opposition calls for new elections as, he said, there is no majority in the parliament for that.
In the US, the Government shutdown enters its eighth day with a lack of progress to restore funding, while news from the Federal Reserve (Fed) is the main fundamental driver amid the absence of key economic data releases. The Minutes of the last Fed meeting confirmed on Wednesday the bank’s challenges to fine-tune its monetary policy, with employment weakening and inflation risks skewed to the upside.
Later on Thursday, more Fed policymakers, including Chairman Jerome Powell, will provide further clues about the bank’s monetary policy plans. However, in the absence of key economic data, they are unlikely to change the market consensus of two more interest rate cuts in the remaining monetary policy meetings this year.
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 | 0.10% | 0.22% | 0.06% | -0.00% | -0.15% | 0.22% | 0.13% | |
| EUR | -0.10% | 0.12% | 0.00% | -0.12% | -0.10% | 0.14% | -0.10% | |
| GBP | -0.22% | -0.12% | -0.18% | -0.22% | -0.24% | 0.06% | -0.19% | |
| JPY | -0.06% | 0.00% | 0.18% | -0.15% | -0.12% | 0.11% | -0.01% | |
| CAD | 0.00% | 0.12% | 0.22% | 0.15% | -0.07% | 0.24% | -0.02% | |
| AUD | 0.15% | 0.10% | 0.24% | 0.12% | 0.07% | 0.33% | -0.02% | |
| NZD | -0.22% | -0.14% | -0.06% | -0.11% | -0.24% | -0.33% | -0.25% | |
| CHF | -0.13% | 0.10% | 0.19% | 0.01% | 0.02% | 0.02% | 0.25% |
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: Improving mood offers respite for the Euro
- A somewhat brighter market sentiment has given some respite for the Euro on Thursday, but the negative trend remains intact. French President Macron is expected to appoint a new Prime Minister, but he will face the same challenges as the previous five PMs to solve the country’s budget problems.
- German Trade Balance recorded a larger-than-expected surplus of EUR 17.2 billion in August, from EUR 14.2 billion in July. However, the increase was mainly due to a 1.3% drop in imports, which offset a 0.5% decline in exports, which fell against expectations for the second consecutive month.
- These figures come after a 4.3% decline in German Industrial Production in August, as reported on Wednesday, to confirm the soft momentum of the region’s leading economy, adding pressure to an already weak Euro.
- In the US, the Minutes of September’s Fed monetary policy meeting confirmed on Wednesday the divergence among policymakers on how much easing is needed to support economic growth without boosting inflation. The dot-plot, included in the Fed’s Summary of Economic Projections released on September 17, showed a 10 to 9 vote for at least two more rate cuts this year.
- On the geopolitical front, Israel and Hamas have agreed to a ceasefire that is expected to lead to the release of the hostages and the reconstruction of war-torn Gaza. Although the agreement seems fragile, it has so far contributed to improving the market mood.
Technical Analysis: EUR/USD remains close to the 1.1600 support area
EUR/USD rallies are finding sellers, keeping the bearish trend in play. Previous support at 1.1650 is limiting upside attempts, with the 1.1600 support area dangerously close. The Relative Strength Index (RSI) remains well below 50, showing a significant bearish pressure.
The rejection at 1.1650 confirms that bears remain in control, although the support level at the 1.1600 area, where Wednesday´s lows meet the trendline support, is likely to be a tough one. Further down, the target would be the August 22 and 27 lows, near 1.1575, and then the August 5 low at 1.1530, although this latter level seems out of reach for on Wednesday.
Immediate resistance is at the 1.1645-1.1650 area (September 25 and October 6 lows), ahead of the descending trendline resistance, now around 1.1720. A break of this level would suggest a trend shift and bring last week’s highs at the 1.1765-1.1775 area into focus.
German economy FAQs
The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany’s economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany’s economy strengthens, it can bolster the Euro’s value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro’s strength and perception in global markets.
Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009-12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the ‘Fiscal Compact’ following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.
Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.
German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond’s price, and it is therefore considered a more accurate reflection of return. A decline in the bund’s price raises the coupon as a percentage of the loan, resulting in a higher Yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.
The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the oversight of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).
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