- EUR/USD regained further gains on Monday, adding 0.65%.
- Despite the short-term bullish momentum, Fiber remains deeply buried in the bearish zone.
- With another week of tepid economic data, the Euro remains exposed to market flows.
EUR/USD pared further losses on Monday, rising almost two-thirds of a percent as markets ease the gas pedal on the dollar and give the euro a chance to catch its breath. Except for a midweek appearance by European Central Bank (ECB) President Christine Lagarde on Wednesday, the economic calendar remains tepid until the global release of Purchasing Managers’ Index (PMI) figures on Friday in both sides of the Atlantic.
Euro markets will be drifting from general market flows until Wednesday, when ECB President Lagarde appears on Wednesday to give the keynote address at the ECB Conference on Financial Stability and Macroprudential Policy. The ECB currently finds itself between a rock and a hard place, as European inflation remains more persistent than European policymakers had initially expected, and the broader European economy continues to tilt unevenly.
The rest of this week’s economic calendar remains a tepid affair on both sides of the Atlantic, although Fiber traders will keep their heads down on Friday when S&P PMI business activity forecasts are released during the European and US market sessions. . European Manufacturing PMI figures are expected to remain stable at 46.0 MoM, with the services component of the European PMI forecast to rise to 51.8 from 51.6. On the US side, headline PMIs are expected to rise, with manufacturing forecast to rise to 48.8 in November from 48.5, and services forecast to rise to 55.2 from 55.0.
EUR/USD Price Forecast
EUR/USD tilted to the bullish side on Monday, reaching the 1.0600 area after the pair strengthened late last week near 1.0500. The pair remains deeply buried in bearish territory, with the price action well below the 200-day EMA at 1.0884.
Fiber found a modest rebound from its lowest prices in over a year, after falling about 6.5% from September peaks just north of the 1.1200 area. With the pair well off its highs, a continued recovery is likely to be met with technical resistance between 1.0700 and 1.0800.
EUR/USD Daily Chart
The Euro FAQs
The Euro is the currency of the 19 countries of the European Union that belong to the eurozone. It is the second most 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 more than $2.2 trillion per day. EUR/USD is the most traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2 %).
The European Central Bank (ECB), headquartered in Frankfurt, Germany, is the reserve bank of the eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means controlling inflation or stimulating growth. Its main tool is the increase or decrease in interest rates. Relatively high interest rates (or the expectation of higher rates) tend to benefit the euro and vice versa. The Governing Council of the ECB makes decisions on monetary policy at meetings held eight times a year. Decisions are made by the directors of the Eurozone’s national banks and six permanent members, including ECB President Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), are an important econometric indicator for the euro. If inflation rises more than expected, especially if it exceeds the ECB’s 2% target, it forces the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to their counterparts tend to benefit the euro, making the region more attractive as a place for global investors to park their money.
The published data measures the health of the economy and may have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer confidence surveys can 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 raise 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 eurozone economies (Germany, France, Italy and Spain) are especially significant, as they represent 75% of the eurozone economy.
Another important data that is published about 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 during a given period. If a country produces highly in-demand export products, its currency will gain value simply from the additional demand created by foreign buyers seeking to purchase those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
