- EUR/USD attracts some buyers in reaction to hawkish comments by an ECB board member.
- A positive risk tone undermines the safe-haven USD and further lends support to the major.
- Bets that the Fed will keep rates higher for longer favour the USD bulls and should cap gains
The EUR/USD pair adds to the previous day’s modest recovery gains from a near three-month low, around the 1.0725-1.0720 area and scales higher for the second straight day on Wednesday amid a modest US Dollar (USD) weakness. The prospect of an Israel-Hamas ceasefire boosts investors’ confidence and drags the safe-haven USD away from its highest level since November 14 touched earlier this week. Apart from this, hawkish comments by the European Central Bank (ECB) Governing Council Member Isabel Schnabel underpin the shared currency and lend additional support to the currency pair.
The markets, however, seem convinced that the ECB could start cutting interest rates by April in the wake of falling inflation in the Eurozone, which might hold back bulls from placing aggressive bets around the Euro. Furthermore, growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer remains supportive of elevated US Treasury bond yields and should help limit any meaningful downside for the Greenback. This, in turn, makes it prudent to wait for strong follow-through buying before confirming that the EUR/USD pair has formed a near-term bottom and positioning for further gains.
- ECB board member Isabel Schnabel told the Financial Times that the central bank must be patient with cutting interest rates as inflation could flare up again, which, in turn, offers support to the Euro.
- This follows comments by ECB Governing Council member Boris Vujcic on Tuesday, saying that the central bank shouldn’t rush to lower rates as there is resilience in services inflation and wages.
- Data published this Wednesday showed that industrial output in Germany – the Eurozone’s top economy – declined by 1.6% in December as against the -0.4% expected and a 0.7% fall in November.
- The prospect of an Israel-Hamas ceasefire lifts hopes for a de-escalation of the crisis in the Middle East and boosts risk sentiment, undermining the safe-haven US Dollar and benefitting the EUR/USD pair.
- Investors continue scaling back their bets for early and steep rate cuts by the Federal Reserve in the wake of robust US macro data released recently and hawkish comments from several FOMC members.
- Fed Chair Jerome Powell, in an interview with US TV show 60 Minutes aired on Sunday, reiterated that the March policy meeting is likely too soon to have confidence to start cutting interest rates.
- Moreover, Philadelphia Fed President Patrick Harker said on Tuesday that the recent news on inflation has been encouraging, though it must be moving sustainably lower to open the rate-cut door.
- Harker added that it would be a mistake to cut rates prematurely as wage gains are too high to achieve the 2% inflation target and that it is possible that inflation may be more persistent than expected.
- Separately, Minneapolis Fed President Neel Kashkari said that we are not done yet on inflation and most of the disinflationary gains have come from the supply-side, but the data is looking positive.
- The yield on the benchmark 10-year US government bond holds steady above 4.0% and favors the USD bulls, warranting caution before placing fresh bullish bets around the currency pair.
- Traders now look to the US Trade Balance data and speeches by Fed officials for short-term opportunities, though the focus remains on the latest US consumer inflation figures next week.
From a technical perspective, the 100-day Simple Moving Average (SMA) support breakpoint, currently pegged around the 1.0775-1.0780 region, might continue to act as an immediate hurdle ahead of the 1.0800 mark. Some follow-through buying has the potential to lift the EUR/USD pair to the 200-day SMA, near the 1.0835-1.0840 zone. The latter should act as a key pivotal point, which if cleared decisively might trigger a short-covering rally and allow spot prices to reclaim the 1.0900 round figure.
On the flip side, immediate support is pegged near the 1.0725-1.0720 region, or a nearly three-month low, ahead of the 1.0700 mark. Some follow-through selling will make the EUR/USD pair vulnerable to accelerate the slide further towards the 1.0665-1.0660 intermediate support en route to the 1.0620-1.0615 region and the 1.0600 round figure.
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 |
CAD |
AUD |
JPY |
NZD |
CHF |
| USD |
|
-0.09% |
-0.19% |
-0.10% |
0.03% |
0.07% |
-0.07% |
0.19% |
| EUR |
0.08% |
|
-0.09% |
0.02% |
0.14% |
0.17% |
0.02% |
0.28% |
| GBP |
0.19% |
0.09% |
|
0.08% |
0.22% |
0.25% |
0.11% |
0.39% |
| CAD |
0.10% |
0.00% |
-0.08% |
|
0.12% |
0.17% |
0.02% |
0.29% |
| AUD |
-0.03% |
-0.13% |
-0.23% |
-0.13% |
|
0.04% |
-0.11% |
0.16% |
| JPY |
-0.07% |
-0.17% |
-0.24% |
-0.19% |
-0.03% |
|
-0.12% |
0.10% |
| NZD |
0.07% |
-0.03% |
-0.12% |
-0.03% |
0.10% |
0.14% |
|
0.25% |
| CHF |
-0.20% |
-0.30% |
-0.38% |
-0.29% |
-0.13% |
-0.11% |
-0.26% |
|
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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region.
The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.
QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
EUR/USD sticks to gains near daily peak amid weaker USD, hawkish ECB comments
The EUR/USD pair adds to the previous day’s modest recovery gains from a near three-month low, around the 1.0725-1.0720 area and scales higher for the second straight day on Wednesday amid a modest US Dollar (USD) weakness. The prospect of an Israel-Hamas ceasefire boosts investors’ confidence and drags the safe-haven USD away from its highest level since November 14 touched earlier this week. Apart from this, hawkish comments by the European Central Bank (ECB) Governing Council Member Isabel Schnabel underpin the shared currency and lend additional support to the currency pair.
The markets, however, seem convinced that the ECB could start cutting interest rates by April in the wake of falling inflation in the Eurozone, which might hold back bulls from placing aggressive bets around the Euro. Furthermore, growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer remains supportive of elevated US Treasury bond yields and should help limit any meaningful downside for the Greenback. This, in turn, makes it prudent to wait for strong follow-through buying before confirming that the EUR/USD pair has formed a near-term bottom and positioning for further gains.
From a technical perspective, the 100-day Simple Moving Average (SMA) support breakpoint, currently pegged around the 1.0775-1.0780 region, might continue to act as an immediate hurdle ahead of the 1.0800 mark. Some follow-through buying has the potential to lift the EUR/USD pair to the 200-day SMA, near the 1.0835-1.0840 zone. The latter should act as a key pivotal point, which if cleared decisively might trigger a short-covering rally and allow spot prices to reclaim the 1.0900 round figure.
On the flip side, immediate support is pegged near the 1.0725-1.0720 region, or a nearly three-month low, ahead of the 1.0700 mark. Some follow-through selling will make the EUR/USD pair vulnerable to accelerate the slide further towards the 1.0665-1.0660 intermediate support en route to the 1.0620-1.0615 region and the 1.0600 round figure.
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.
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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region.
The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.
QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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