- EUR/USD trades back and forth near 1.0950 as investors await the US PPI for fresh cues on the Fed’s interest rate outlook.
- The Fed is expected to cut interest rates by 25 bps in November.
- The Euro gains despite firm ECB dovish bets amid a faster-than-expected decline in Eurozone inflationary pressures.
EUR/USD consolidates near 1.0950 in European trading hours despite the Euro (EUR) performs strongly against its major peers. The Euro outperforms even though market participants expect the European Central Bank (ECB) to cut interest rates further in both monetary policy meetings remaining this year.
The ECB has already reduced its Deposit Facility Rate by 50 basis points (bps) to 3.5% this year. The central bank is expected to cut them further by 50 bps again in the remaining year. Traders have priced in two rate cuts of 25 bps, one of which will come next week and the second in December.
ECB dovish bets have been accelerated by a faster-than-expected decline in Eurozone inflationary pressures and growing risks to economic growth. This week, ECB policymaker and Governor of the Greek Central Bank Yannis Stournaras said that price pressures are declining faster than the ECB forecasted in September. Stournaras also backed two more rate cuts in each of the remaining meetings this year, emphasizing the need to reduce them further in 2025.
Meanwhile, revised estimates for the German Harmonized Index of Consumer Prices (HICP) for September have shown that price pressures remained below the bank’s target of 2% at 1.8%, as shown in flash estimates.
On the economic front, the growth prospects of the Eurozone are vulnerable as its largest nation, Germany is forecasted to close the year with a decline in output by 0.2%, the German economic ministry said.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.03% | -0.02% | 0.33% | 0.20% | 0.04% | 0.01% | 0.19% | |
| EUR | 0.03% | -0.04% | 0.31% | 0.17% | 0.07% | -0.01% | 0.17% | |
| GBP | 0.02% | 0.04% | 0.35% | 0.21% | 0.11% | 0.03% | 0.22% | |
| JPY | -0.33% | -0.31% | -0.35% | -0.13% | -0.26% | -0.33% | -0.21% | |
| CAD | -0.20% | -0.17% | -0.21% | 0.13% | -0.12% | -0.18% | 0.00% | |
| AUD | -0.04% | -0.07% | -0.11% | 0.26% | 0.12% | -0.09% | 0.09% | |
| NZD | -0.01% | 0.00% | -0.03% | 0.33% | 0.18% | 0.09% | 0.20% | |
| CHF | -0.19% | -0.17% | -0.22% | 0.21% | -0.01% | -0.09% | -0.20% |
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: EUR/USD oscillates in tight range ahead of US PPI
- EUR/USD trades in a tight range near 1.0950 in Friday’s New York session. The major currency pair consolidates as the US Dollar (USD) turns sideways ahead of the United States (US) Producer Price Index (PPI) data, which will be published at 12:30 GMT. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, holds onto gains near 103.00.
- Investors will pay close attention to the US PPI data as it will indicate the pace at which prices of goods and services were raised by producers at factory gates in September. Producer inflation is majorly influenced by the change in input cost and households’ demand.
- Economists expect the annual headline PPI inflation to have decelerated to 1.6% from 1.7% in August. The annual core PPI – which strips off volatile food and energy prices – is estimated to have accelerated sharply by 2.7% from the former release of 2.4%. The monthly headline and core PPI are expected to have grown at a slower pace of 0.1% and 0.2%, respectively.
- The US Dollar is broadly upbeat as Atlanta Federal Reserve (Fed) Bank President Raphael Bostic has brought the option of leaving interest rates unchanged at 4.75%-5.00% in November on the table.
- The comments from Bostic in an interview with the Wall Street Journal on Thursday indicated that he is comfortable with skipping the interest rate cut next month. Bostic said, “This choppiness to me is along the lines of maybe we should take a pause in November and I’m definitely open to that.” His comments came after the release of the US Consumer Price Index (CPI) report, which showed that inflationary pressures rose at a faster-than-expected pace in September.
Technical Analysis: EUR/USD remains supported near 200-day EMA
EUR/USD finds temporary support near the 200-day Exponential Moving Average (EMA) around 1.0900. The near-term outlook of the pair remains uncertain as the 20- and 50-day EMAs are on course to deliver a bear cross near 1.1020.
The shared currency pair weakened after delivering a breakdown of a Double Top chart pattern formation on a daily timeframe. The above-mentioned chart pattern was triggered after the shared currency pair broke below the September 11 low of 1.1000.
The 14-day Relative Strength Index (RSI) settles inside the bearish range of 20.00-40.00, suggesting more weakness ahead.
Looking down, the pair is expected to find support near the round-level support of 1.0800 if it decisively breaks below the 200-day EMA around 1.0900. On the upside, the September 11 low of 1.1000 and the 20-day EMA at 1.1090 will be major resistance zones.
Economic Indicator
Producer Price Index ex Food & Energy (YoY)
The Producer Price Index ex Food & energy released by the Bureau of Labor statistics, Department of Labor measures the average changes in prices in primary markets of the US by producers of commodities in all states of processing. Those volatile products such as food and energy are excluded in order to capture an accurate calculation. Generally speaking, a high reading is seen as positive (or bullish) for the USD, whereas a low reading is seen as negative (or bearish).