- EUR/USD holds support near 1.0760 as the near-term outlook remains discouraging amid weakness in Eurozone business activity.
- Traders are looking for new clues on the likely size of the ECB’s rate cut in December.
- EUR/USD has also benefited from a slight correction in the US Dollar.
EUR/USD finds fresh buying interest near a three-month low of 1.0760 in the North American session on Thursday. The major currency pair strengthens even though preliminary Composite Purchasing Managers’ Index (PMI) data from the Hamburg Commercial Bank (HCOB) showed Eurozone economic activity continued to contract in October. The PMI rose to 49.7 from 49.6 in September, below the 50 threshold that separates expansion from contraction, amid a continued decline in manufacturing sector activity and moderate growth in service sector output.
“The Eurozone is caught in a bit of a slump, with the economy contracting marginally for the second consecutive month. The continued decline in manufacturing is being largely offset by small gains in the services sector. At the country level, it can be noted that the deterioration of The situation in France was offset by a slight moderation in the decline in Germany. For now, it is unclear whether we will see further deterioration or improvement in the near future,” said Dr. Cyrus de la Rubia, Chief Economist at HCOB.
The HCOB PMI report also showed subdued business confidence, weak orders from domestic and foreign markets, a modest increase in input prices and a reduction in the workforce, pointing to the need for economic stimuli that would raise expectations of further rate cuts by the European Central Bank (ECB).
The ECB has already reduced its Deposit Rate by 75 basis points (bps) this year to 3.25%, and traders expect the central bank to cut again in December. Meanwhile, market participants are uncertain about the likely size of the rate cut, as the option of a larger-than-usual reduction has entered the picture.
On Wednesday, Bank of Portugal Governor and ECB policymaker Mario Centeno said the option of a 50 bps rate cut in December is on the table. Centeno warned that downside risks to growth are accumulating.
Euro PRICE Today
The table below shows the percentage change of the Euro (EUR) against the main currencies today. Euro was the strongest currency against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.19% | -0.46% | -0.59% | -0.13% | -0.28% | -0.41% | -0.10% | |
| EUR | 0.19% | -0.28% | -0.41% | 0.06% | -0.10% | -0.20% | 0.06% | |
| GBP | 0.46% | 0.28% | -0.14% | 0.33% | 0.17% | 0.07% | 0.35% | |
| JPY | 0.59% | 0.41% | 0.14% | 0.45% | 0.31% | 0.18% | 0.48% | |
| CAD | 0.13% | -0.06% | -0.33% | -0.45% | -0.14% | -0.25% | 0.02% | |
| AUD | 0.28% | 0.10% | -0.17% | -0.31% | 0.14% | -0.08% | 0.17% | |
| NZD | 0.41% | 0.20% | -0.07% | -0.18% | 0.25% | 0.08% | 0.27% | |
| CHF | 0.10% | -0.06% | -0.35% | -0.48% | -0.02% | -0.17% | -0.27% |
The heat map shows percentage changes for major currencies. The base currency is selected from the left column, while the quote currency is selected from the top row. For example, if you choose the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change shown in the box will represent EUR (base)/USD (quote).
Daily Market Summary: EUR/USD Rebounds at the Expense of the US Dollar
- EUR/USD has also added some gains in the North American session on Thursday at the expense of the US Dollar (USD). The US Dollar Index (DXY), which measures the value of the Dollar against six major currencies, corrects slightly to near 104.20 after recording a new 12-week high around 104.50 on Wednesday.
- However, the near-term outlook for the US dollar remains firm as investors expect the Federal Reserve (Fed) to follow a more gradual approach to rate cuts. The Fed’s Beige Book on Wednesday showed that overall business activity was little changed in early October, and there was a slight increase in hiring with moderate growth in inflation pressures.
- Meanwhile, uncertainty over the United States (US) presidential election on November 5 has also kept the US dollar strong. Market participants fear that the scenario of a Trump victory in the elections will result in higher tariffs, which will have a significant impact on the US’s closed trading partners.
- Looking ahead, the US Dollar’s next move will be driven by preliminary US S&P Global PMI data for October and Durable Goods Orders data for September, due at 13:45 GMT and on Friday, respectively.
- Meanwhile, initial jobless claims for the week ending October 18 have been 227,000, below expectations and the previous release of 242,000.
Technical Analysis: EUR/USD finds support near 1.0750
EUR/USD finds temporary support near 1.0760 in European trading hours. However, the outlook for the major currency pair remains discouraging as it remains below the 200-day exponential moving average (EMA), which is trading around 1.0900.
The downward move in the shared currency pair began after a breakout of a Double Top formation on the daily time frame near the September 11 low around 1.1000, resulting in a bearish reversal.
The 14-day Relative Strength Index (RSI) indicator falls below 30.00, indicating strong bearish momentum. However, a recovery move remains on the cards as conditions become oversold.
To the downside, the pair could see further weakness towards the round support level of 1.0700 if it falls below the ascending trend line at 1.0750, which is drawn from the October 3 low around 1.0450. Meanwhile, the 200-day EMA near 1.0900 and the psychological figure of 1.1000 will be the key resistance for the pair.
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.
