EUR/USD Keeps Hovering Above Multi-Week Lows Ahead Of US Payrolls Data
- The Euro hestitates right above 1.1400 following hotter-than-expected Eurozone inflation figures.
- The Dollar consolidates gains, favoured by a risk-averse market and dwindling hopes of Fed interest-rate cuts.
- The US Nonfarm Payrolls report will provide further insight into the chances of a Fed rate cut in September.
The EUR/USD has given away previous gains to test recent lows against the US Dollar following stronger-than-expected Eurozone inflation data. The sour market mood, after US President Donald Trump signed executive orders to impose tariffs on dozens of trading partners, keeps underpinning the safe-haven US Dollar ahead of the United States (US) July Nonfarm Payrolls report.
The Euro (EUR) extended its reversal from intra-day highs at 1.1440 to retest the multi-week lows at 1.1400 after data released by Eurostat showed that Eurozone inflation grew at a steady at a 2% rate, against expectations of a slight moderation to 1.9%. In the same line, the core inflation remained steady at a 2.3% year-on-year rate, against expectations of a 2.2% reading.
These figures have added pressure to the pair, which is on track for its worst weekly performance in years as it trades about 2.7% below Monday's highs at the moment of writing. The US Dollar, on the other hand, remains firm, on the back of a hawkish stance portrayed by the Federal Reserve's (Fed) Chairman Jerome Powell after Wednesday's monetary policy decision, and the hotter Personal Consumption Expenditures data released on Thursday.
In the trade front, European imports to the US will face a 15% tariff after a EU-US trade pact that has been considered fairly unfavorable for the Eurozone economy, and which has been partially responsible for the recent Euro sell-off.
Trading volumes, however, are likely to remain low, as investors await the release of the US Nonfarm Payrolls report, eager for further clues about the September Fed decision. Previous hopes of a 25 bps rate cut after the summer have been crushed by recent data, but some cooling in the labour market might force the bank to reconsider that option and trigger some USD profit-taking.
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 | 0.12% | 0.31% | -0.23% | 0.16% | 0.06% | 0.60% | 0.48% | |
| EUR | -0.12% | 0.28% | -0.31% | 0.10% | 0.07% | 0.33% | 0.42% | |
| GBP | -0.31% | -0.28% | -0.57% | -0.18% | -0.21% | 0.26% | 0.15% | |
| JPY | 0.23% | 0.31% | 0.57% | 0.36% | 0.28% | 0.70% | 0.69% | |
| CAD | -0.16% | -0.10% | 0.18% | -0.36% | -0.12% | 0.44% | 0.34% | |
| AUD | -0.06% | -0.07% | 0.21% | -0.28% | 0.12% | 0.48% | 0.50% | |
| NZD | -0.60% | -0.33% | -0.26% | -0.70% | -0.44% | -0.48% | -0.01% | |
| CHF | -0.48% | -0.42% | -0.15% | -0.69% | -0.34% | -0.50% | 0.00% |
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: The Dollar holds gains ahead of the US NFP report
- The US Dollar has been the best performer of the G8 currencies this week and remains firm ahead of July's Nonfarm Payrolls report. The US economy is expected to have created 110,000 new jobs last month, down from 147,000 in June. The unemployment rate is seen increasing to 4.2% from the previous 4.1%, with wage growth ticking up. The data will be released at 12:30 GMT.
- At 14:00 GMT, the US ISM Manufacturing Purchasing Managers' Index (PMI) is expected to increase to 49.5 in July from 49.0 in June, showing that business activity in the factory sector continued to contract, albeit at a more moderate pace.
- In Europe, July's final Manufacturing PMI confirmed the preliminary reading that showed that the sector's activity improved to 49.8, from 48.5 in the previous month. The impact on the Euro has been marginal..
- On Thursday, the US PCE Price Index revealed higher-than-expected inflation, as the year-on-year rate accelerated to 2.6% from 2.4%, above the 2.5% print forecasted by the market. Likewise, the core reading rose at a 2.8% yearly rate, beating expectations of a steady 2.7% rate.
- These figures did not stop US President Trump from resuming his attacks on Fed's Chair Powell, calling him a "terrible" Fed Chairman and regretting his decision to appoint him to the charge in his first term.
EUR/USD has little scope for further depreciation
(Click on image to enlarge)
EUR/USD is testing levels below the 1.1400 area after the release of the Eurozone inflation numbers, but the scope for further decline seems limited after a nearly 3% sell-off this week so far. The 4-hour RSI is well into oversold levels, and the MACD in the same time frame is attempting a bullish cross, which suggests that the bearish cycle has run out of steam.
On the upside, immediate resistance is at 1.1463, Thursday's high. Further up, the pair might find sellers at the 1.1500 psychological level and the July 30 high, at 1.1575. Supports are at the weekly low of 1.1400, and below here, 1.1370, June 6 and 10 lows, and the May 30 low, at 1.1312.
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