EUR/USD Gets Dragged Down By Greenback Recovery As ECB Stands Pat Once More

By Joshua Gibson of FX Street

Thursday, July 18, 2024 9:10 PM EDT

Bank Note, Euro, Bills, Paper Money

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EUR/USD backlides to 1.0900 handle on Thursday as US Dollar flows recover lost ground.
The ECB held rates steady on Thursday as policymakers keep watching for inflation.
Fiber traders to turn toward next week’s pan-EU inflation figures.

EUR/USD shed weight on Thursday, falling back into the 1.0900 key handle amid a broad-market recovery in Greenback bidding. An uptick in weekly US jobless claims helped to further support hopes for a September rate cut from the Federal Reserve (Fed), while the European Central Bank (ECB) balked in the face of lopsided economic data and opted to keep rates on hold for the time being.

With an ECB rate hold on the books for July, Fiber traders will be turning to next week’s pan-EU Harmonized Index of Consumer Prices (HICP) inflation data. Friday is a largely low-tier data showing for the Euro, leaving investors to sit and wait for next Tuesday’s inflation data to begin sussing out odds of a follow-up rate cut to the ECB’s initial rate trim in June.

US Initial Jobless Claims increased more than expected on Thursday, adding 243K new unemployment benefits seekers for the week ended July 12 compared to the expected 230K, and rising above the previous week’s revised 223K. With labor data softening, market expectations of a September rate cut will be further bolstered, but bets for a Fed rate trim have nowhere left to go with markets already pricing in nearly 100% odds of a quarter-point rate cut from the Federal Open Market Committee (FOMC) on September 18.

EURO PRICE THIS WEEK

The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the New Zealand Dollar.

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).

EUR/USD technical outlook

The Fiber saw its worst trading day in over a month on Thursday, flubbing recent bullish momentum and tumbling back into the 1.0900 handle after reaching a four-month high just shy of 1.0950. Intraday price action is still holding north of the 200-hour Exponential Moving Average (EMA) at 1.0879, but an extended slide could kick off another round of bearishness.

EUR/USD has cycled the 200-day EMA at 1.0800 since last November, and another technical rejection from 1.0900 leaves the Fiber exposed to a bearish reversal. A shortside push could see the pair tumbling back to June’s recent lows below 1.0700.