The Euro (EUR) is trading firm against the US Dollar (USD) at the week’s opening, trading at levels right above 1.1860 at the time of writing on Monday. Upbeat Eurozone investors’ sentiment data has provided additional support to a firm euro, already on a strong footing, as market expectations that the US Federal Reserve (Fed) will cut interest rates further in the coming months are weighing on the US Dollar.
In the Asian session, the market welcomed the landslide victory of Prime Minister Sanae Takaichi in Japan, which has soothed concerns amid prospects of a stable government. The immediate reaction has been a Japanese Yen (JPY) recovery, which has increased bearish pressure on the USD.
Later in the day, the focus will shift to the speeches of European Central Bank (ECB) policymakers, including President Christine Lagarde. Nevertheless, there are no reasons to think that they might have changed the message from last week’s monetary policy meeting, pointing to a steady monetary policy.
Also on Monday’s US trading session, speeches from Fed members will likely show the divergence within the central bank’s monetary policy committee. Governors Stephen Miran and Christopher Waller are likely to defend lower interest rates, while the Atlanta Fed President Raphael Bostic might show a more cautious stance.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.34% | 0.13% | -0.28% | -0.05% | -0.16% | 0.16% | -0.36% | |
| EUR | 0.34% | 0.47% | 0.04% | 0.28% | 0.17% | 0.50% | -0.03% | |
| GBP | -0.13% | -0.47% | -0.43% | -0.20% | -0.29% | 0.03% | -0.49% | |
| JPY | 0.28% | -0.04% | 0.43% | 0.22% | 0.12% | 0.44% | -0.09% | |
| CAD | 0.05% | -0.28% | 0.20% | -0.22% | -0.11% | 0.22% | -0.31% | |
| AUD | 0.16% | -0.17% | 0.29% | -0.12% | 0.11% | 0.33% | -0.20% | |
| NZD | -0.16% | -0.50% | -0.03% | -0.44% | -0.22% | -0.33% | -0.53% | |
| CHF | 0.36% | 0.03% | 0.49% | 0.09% | 0.31% | 0.20% | 0.53% |
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: Rising Fed cuts hopes are weighing on the US Dollar
- The US Dollar has opened the week on the back foot, as weak employment figures last week have boosted investors’ expectations that the Fed will be forced to lower borrowing costs further to support employment creation. This contrasts with the hawkish tone of the last ECB’s statement, leading to a Euro-supportive monetary policy divergence.
- The odds of a Fed interest rate cut in March have risen above 17% from 10% last week, while markets are pricing in nearly a 70% chance of monetary easing in June – the first meeting after Chairman Jerome Powell’s term ends – according to data from the CME Group’s Fed Watch Tool.
- Earlier on Monday, the Eurozone’s Sentix Investors’ Sentiment Index showed an improvement to 4.2 in February, from -1.8 in January, posting the first positive reading since July. The survey also highlights investors’ greater confidence in the German economy amid greater hopes of a global stabilisation driven by higher growth in the US and Asia.
- The highlight of Monday’s Asian session has been the strong victory of Sanae Takaichi’s Liberal Democratic Party (LDP) in Japan’s Elections. The LDP and its coalition partner have obtained 352 of the 465 seats in the Lower House, which paves the path for her fiscal-expansionist agenda. Traders have scaled back Yen short positions as the immediate reaction to the news, which has sent the US lower.
- The US Dollar struggled to hold gains last week, as a string of downbeat employment reports brought concerns about the labor market back to the table.
- On Friday, the preliminary data showed that the Michigan Consumer Sentiment Index rose for the third consecutive month in February, against expectations, but it failed to improve investors’ sentiment towards the US Dollar.
- Later this week, the market will be attentive to key US economic releases, including the delayed February Nonfarm Payrolls (NFP) report, which is due on Wednesday. US Retail Sales, due on Tuesday, and the Consumer Price Index (CPI) report on Friday will also be analysed in detail
Technical Analysis: EUR/USD bulls take control, aiming for the 1.1900 area
EUR/USD correction has found support at the 61.8% Fibonacci retracement level from the late-January upswing, and the pair is trending higher again, with technical indicators in 4-hour chart underscoring the bullish momentum. The Moving Average Convergence Divergence (MACD) histogram turns positive and widens, and the Relative Strength Index (RSI) has climbed above 60, reinforcing the positive tone.
Bulls are aiming for the area between February 1 and 2 highs, near 1.1875, and the previous support zone around 1.1895, which capped bears on January 28 and 30. Further up, 1.1954 comes into focus.
Intraday support is at 1.1815, ahead of the key 1.1765 level (Friday’s low)
(The technical analysis of this story was written with the help of an AI tool.)
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates.
When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money.
When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions.
The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system.
It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
