- EUR/USD reclaims territory near 1.0880 after drop into 1.0820.
- German Consumer Confidence declined to 11-month low.
- US PCE inflation eased more than expected, but spending remained high.
EUR/USD recovered recent losses on Friday, recovering back into familiar technical levels. Still, overall gains remained limited after German Consumer Confidence backslid to almost a one-year low as economic conditions in Europe remain tepid at best.
US Personal Consumption Expenditure (PCE) Price Index inflation figures eased more than expected, but further gains in December’s Personal Spending alongside an unexpected uptick in Pending Home Sales trimmed rate cut expectations. With the US domestic economy continuing to bump along at a healthy clip, market hopes for early and deep rate cuts from the Federal Reserve continue to wilt.
Daily digest market movers: EUR/USD pares losses despite determined Greenback
- EUR/USD slipped into multi-week lows early Friday after German Gfk Consumer Confidence in February declined to an 11-month low of -29.7 versus the forecasted improvement from -25.1 to -24.5.
- The US Dollar broadly recovered after US YoY Core PCE Price Index figures in December eased to 2.9% from the forecast of 3.0%, previous 3.2%.
- Despite the easing in inflation, US Personal Spending and Pending Home Sales both stepped higher.
- Personal Spending rose 0.7% in December versus the 0.4% forecast, with the previous month’s print getting revised to 0.4% from 0.2%.
- US Pending Home Sales climbed 8.3% in December compared to the expected rebound to 1.5% from the previous month’s 0.3% decline (revised down from 0.0%).
- Next week brings European Gross Domestic Product (GDP) numbers on Tuesday, with the next high-impact rate call from the US Federal Reserve (Fed) slated for Wednesday.
- Euro area Q4 GDP is expected to print at -0.1%, in line with the previous figure as the pan-European economy lags in stagnation.
- Federal Reserve expected to hold rates steady in January, CME FedWatch Tool suggests markets pivoted to betting on the first rate cut in May after rate bets shifted post-PCE print.
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 | CAD | AUD | JPY | NZD | CHF | |
USD | -0.15% | -0.03% | -0.11% | 0.05% | 0.18% | 0.16% | -0.36% | |
EUR | 0.16% | 0.13% | 0.05% | 0.20% | 0.35% | 0.33% | -0.21% | |
GBP | 0.02% | -0.12% | -0.08% | 0.06% | 0.23% | 0.20% | -0.33% | |
CAD | 0.11% | -0.04% | 0.07% | 0.16% | 0.29% | 0.28% | -0.25% | |
AUD | -0.03% | -0.19% | -0.06% | -0.14% | 0.15% | 0.13% | -0.41% | |
JPY | -0.19% | -0.35% | -0.21% | -0.31% | -0.16% | -0.02% | -0.54% | |
NZD | -0.16% | -0.33% | -0.20% | -0.27% | -0.13% | 0.00% | -0.53% | |
CHF | 0.34% | 0.19% | 0.31% | 0.23% | 0.37% | 0.52% | 0.51% |
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 gets pushed back into technical barriers, but topside limited
EUR/USD hit a multi-week low of 1.0813 early Friday before a rebound into the 200-hour Simple Moving Average (SMA) near 1.0880. Dollar bets continue to weigh on USD pairs, keeping EUR/USD leaning toward a near-term middle around 1.0850.
Despite intraday tests into the low side, EUR/USD is set to continue languishing in an ongoing congestion pattern between the 50-day and 200-day SMAs at 11.0925 and 1.0850, respectively. The pair has been trapped within the consolidation pattern since dropping from December’s peak near 1.1140.
EUR/USD Hourly Chart
EUR/USD Daily Chart![](https://i0.wp.com/editorial.fxstreet.com/miscelaneous/EUR_USD-638418890702763616.png?w=788&ssl=1)
Central banks FAQs
Central Banks have a key mandate which is making sure that there is price stability in a country or region. Economies are constantly facing inflation or deflation when prices for certain goods and services are fluctuating. Constant rising prices for the same goods means inflation, constant lowered prices for the same goods means deflation. It is the task of the central bank to keep the demand in line by tweaking its policy rate. For the biggest central banks like the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England (BoE), the mandate is to keep inflation close to 2%.
A central bank has one important tool at its disposal to get inflation higher or lower, and that is by tweaking its benchmark policy rate, commonly known as interest rate. On pre-communicated moments, the central bank will issue a statement with its policy rate and provide additional reasoning on why it is either remaining or changing (cutting or hiking) it. Local banks will adjust their savings and lending rates accordingly, which in turn will make it either harder or easier for people to earn on their savings or for companies to take out loans and make investments in their businesses. When the central bank hikes interest rates substantially, this is called monetary tightening. When it is cutting its benchmark rate, it is called monetary easing.
A central bank is often politically independent. Members of the central bank policy board are passing through a series of panels and hearings before being appointed to a policy board seat. Each member in that board often has a certain conviction on how the central bank should control inflation and the subsequent monetary policy. Members that want a very loose monetary policy, with low rates and cheap lending, to boost the economy substantially while being content to see inflation slightly above 2%, are called ‘doves’. Members that rather want to see higher rates to reward savings and want to keep a lit on inflation at all time are called ‘hawks’ and will not rest until inflation is at or just below 2%.
Normally, there is a chairman or president who leads each meeting, needs to create a consensus between the hawks or doves and has his or her final say when it would come down to a vote split to avoid a 50-50 tie on whether the current policy should be adjusted. The chairman will deliver speeches which often can be followed live, where the current monetary stance and outlook is being communicated. A central bank will try to push forward its monetary policy without triggering violent swings in rates, equities, or its currency. All members of the central bank will channel their stance toward the markets in advance of a policy meeting event. A few days before a policy meeting takes place until the new policy has been communicated, members are forbidden to talk publicly. This is called the blackout period.
Credit: Source link