- EUR/USD continues its sideways move above 1.0900 on Friday.
- The euro must break out of the 1.0900-1.0940 range to determine the next direction.
- The economic calendar does not contain any publications of important dates.
EUR/USD closed almost unchanged for the second day in a row on Thursday. The pair continues to fluctuate in a tight channel above 1.0900 early Friday as investors await the next catalyst.
Euro price this week
The following table shows the percentage change of the Euro (EUR) against the major currencies this week. The Euro was strongest against the Swiss Franc.
| USD | EUR | GBP | EUR | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | 0.31% | 0.44% | -0.98% | -1.25% | -1.14% | 0.85% | |
| EUR | 0.07% | 0.31% | 0.35% | -1.03% | -1.17% | -1.18% | 0.81% | |
| GBP | -0.31% | -0.31% | 0.11% | -1.31% | -1.47% | -1.48% | 0.51% | |
| EUR | -0.44% | -0.35% | -0.11% | -1.37% | -1.72% | -1.55% | 0.44% | |
| CAD | 0.98% | 1.03% | 1.31% | 1.37% | -0.24% | -0.16% | 1.66% | |
| AUD | 1.25% | 1.17% | 1.47% | 1.72% | 0.24% | -0.01% | 2.00% | |
| NZD | 1.14% | 1.18% | 1.48% | 1.55% | 0.16% | 0.00% | 2.01% | |
| CHF | -0.85% | -0.81% | -0.51% | -0.44% | -1.66% | -2.00% | -2.01% |
The heatmap shows the percentage changes of the major currencies relative to each other. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you select the euro from the left column and move along the horizontal line to the US dollar, the percentage change shown in the box corresponds to the EUR (base)/USD (quote) ratio.
EUR/USD edged down slightly in early US trading Thursday after data from the US showed that weekly initial jobless claims fell to 233,000 from 250,000. Later in the day, the US dollar (USD) lost strength as risk flows began to dominate financial market action, helping the pair pare back its daily losses.
The economic calendar does not offer any important data releases that could affect the development of the EUR/USD pair before the weekend.
Investors are therefore likely to react to changes in risk perception. At the time of writing, the Euro Stoxx 50 Index was up 0.25 percent and US stock index futures were trading slightly higher.
If market participants start to shift away from risk-sensitive assets to avoid going on the defensive over the weekend, the USD could remain stable against its peers and make it difficult for EUR/USD to continue rising. On the other hand, a bullish start on Wall Street and a continuation of the risk-on rally could help the pair hold its position until the weekend.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart is moving sideways slightly above 50, reflecting a lack of directional momentum. On the downside, the first support is at 1.0900 (psychological level, static level) ahead of 1.0870, where the 100- and 50-period SMAs meet the 20-day SMA and 1.0840 (200-period SMA).
If the pair rises above 1.0940 (static level), technical buyers might show interest. In this scenario, 1.0960 (static level) could be considered as an interim resistance ahead of 1.1000 (psychological level, static level).
Frequently asked questions about the euro
The euro is the currency of the 20 European Union countries that make up the eurozone. It is the second most traded currency in the world after the US dollar, accounting for 31% of all foreign exchange transactions in 2022, with an average daily turnover of over $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) in Frankfurt, Germany, is the reserve bank of the eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s main mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its main tool is to raise or lower interest rates. Relatively high interest rates – or the expectation of higher interest rates – usually benefit the euro, and vice versa. The ECB’s Governing Council takes monetary policy decisions at meetings eight times a year. Decisions are made by the heads of the eurozone’s national banks and six permanent members, including ECB President Christine Lagarde.
Inflation data for the euro area, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric measure for the euro. If inflation rises more than expected, especially above the ECB’s 2% target, the ECB will have to raise interest rates to bring it back under control. Relatively high interest rates compared to counterpart currencies tend to benefit the euro, as they make the region more attractive for global investors to park their money.
Data releases measure the health of the economy and can affect the euro. Indicators such as GDP, purchasing managers’ indices for manufacturing and services, employment and consumer sentiment surveys can all 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 can also 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 particularly telling, as they account for 75% of the eurozone economy.
Another important data release for the euro is the trade balance. This indicator measures the difference between a country’s export revenues and import expenditures over a given period. If a country produces export goods that are in high demand, its currency will appreciate simply from the additional demand from foreign buyers who want to buy those goods. Therefore, a positive net trade balance strengthens a currency and a negative balance is the opposite.
