EUR/USD finds the floor once more as US NFP sends Greenback higher

  • EUR/USD loses key technical handle after US Jobs Report thumps forecasts.
  • US NFP hits highest level in a year, March rate cut hopes all but buried.
  • US Average Hourly Earnings also gained ground in January.

EUR/USD continues to churn on Friday, keeping a near-term choppy technical pattern intact as the Euro (EUR) cycles against the US Dollar (USD).

US Nonfarm Payrolls wildly outperformed market expectations, hitting a one-year high and bringing sharp upside revisions to previous datapoints. Investors hoping for faster, sooner rate cuts from the US Federal Reserve (Fed) have seen rate cut hopes dwindle as the US domestic economy continues to surprise with its sturdiness.

Daily digest market movers: EUR/USD back into familiar lows as cyclical pattern drags the pair down.

  • EUR/USD climbed into 1.0900 early Friday before getting dragged back down post-NFP.
  • US Nonfarm Payrolls climbed to 353K in January, vaulting well over the forecast 180K.
  • US Nonfarm Payrolls: surge 353,000 in January
  • December’s NFP figure also saw a sharp upside revision to 333K from 216K.
  • YoY US Average Hourly Earnings also gained in January, coming in at 4.5% versus the forecast 4.1% and the previous period’s 4.4% (revised upwards from 4.1%).
  • MoM US Average Hourly Earnings climbed 0.6% in January versus the forecast 0.3%, 0.4% last.
  • US Unemployment Rate held steady at 3.7% in January; markets expected a tick upwards to 3.8%.
  • Michigan Consumer Sentiment Index gained to 79.0, above the forecast 78.9 and climbing further above the previous month’s 78.8.

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 0.82%0.97%0.62%1.02%1.35%1.30%1.16%
EUR-0.82% 0.17%-0.21%0.19%0.52%0.50%0.32%
GBP-0.96%-0.15% -0.32%0.06%0.38%0.33%0.20%
CAD-0.64%0.18%0.34% 0.39%0.72%0.67%0.51%
AUD-1.01%-0.19%-0.02%-0.36% 0.32%0.31%0.12%
JPY-1.37%-0.51%-0.34%-0.74%-0.33% 0.01%-0.20%
NZD-1.32%-0.50%-0.33%-0.71%-0.31%0.00% -0.15%

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).

Technical analysis: EUR/USD steeply off recent highs as whipsaw pattern remains

EUR/USD came within touching distance of 1.0900 early Friday, but the pair got dragged back into familiar lows below 1.0800 near 1. 0780.

Friday’s bearish action sees the EUR/USD tumble out of a familiar consolidation zone between the 200-day and 50-day Simple Moving Averages (SMA), between 1.0900 and 1.0850.

The EUR/USD continues to drift into the low side in choppy trading, and the pair is down over 3% from December’s swing high into 1.1140.

EUR/USD hourly chart

EUR/USD daily chart


What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

What is the ECB and how does it impact the Euro?

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the 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.

How does inflation data impact the value of the Euro?

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

How does economic data influence the value of the Euro?

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, 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 may encourage the ECB to put up 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 economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

How does the Trade Balance impact the Euro?

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

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