- EUR/USD weakens near 1.0965 in early Monday’s European session.
- The pair’s bullish outlook appears fragile on the daily chart, with the RSI indicator remaining below the midline.
- The initial support level is observed at 1.0881; The immediate resistance level is located at 1.1000.
The EUR/USD pair is trading in negative territory for the seventh consecutive day around 1.0965 during the early Monday European session. The major pair remains under selling pressure amid further rise in the US Dollar (USD). Recent US jobs data released on Friday has led traders to lower expectations of a 50 basis point (bp) Fed rate cut at the November meeting.
Based on the daily chart, the bullish outlook for EUR/USD appears vulnerable as the major pair hovers around the key 100-day EMA. EUR/USD could resume its bearish bias if it decisively crosses below the 100-day EMA. Furthermore, the bearish momentum is supported by the Relative Strength Index (RSI), which is below the midline near 37.55, suggesting that the path of least resistance is to the downside.
A decisive trade below the 100-day EMA at 1.0970 could see a drop to 1.0881, the August 8 low. The crucial support level for the cross emerges in the 1.0805-1.0800 zone, the July 9 low and the round mark.
To the upside, the psychological level of 1.1000 will be the first bullish barrier for the pair. Extended gains could see a rally to 1.1144, the October 1 high. A break above this level could pave the way towards 1.1223, the upper boundary of the Bollinger Band.
EUR/USD Daily Chart
The Euro FAQs
The Euro is the currency of the 20 countries of the European Union that belong to the euro zone. It is the second most traded currency in the world, behind the US dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily volume of more than $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), headquartered in Frankfurt, Germany, is the reserve bank of the euro zone. The ECB sets interest rates and manages monetary policy The ECB’s main mandate is to maintain price stability, which means controlling inflation or stimulating growth. Its main instrument is to raise or lower interest rates. Relatively high interest rates – or the expectation of higher rates – tend to benefit the Euro and vice versa. The Governing Council of the ECB takes monetary policy decisions at meetings held 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.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), are an important econometric data for the euro. If inflation rises more than expected, especially if it exceeds the 2% target set by the ECB, it is forced to raise interest rates to bring it back under control. Relatively high interest rates compared to their peers tend to benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases measure the health of the economy and can influence the Euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer sentiment surveys can 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 raise interest rates, which will directly strengthen the Euro. Conversely, if economic data is weak, the Euro is likely to fall. The economic data for the four largest economies in the eurozone (Germany, France, Italy and Spain) are especially significant, as they represent 75% of the eurozone economy.
Another important 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 during a given period. If a country produces highly sought-after export products, its currency will appreciate due to the additional demand created by foreign buyers wishing to purchase these goods. Therefore, a positive net trade balance strengthens a currency and vice versa for a negative balance.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
