Euro meets initial support near 1.0840 – Crypto News – Crypto News
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EUR/USD grinds lower on a firm US dollar, risk-off impulse EUR/USD grinds lower on a firm US dollar, risk-off impulse

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Euro meets initial support near 1.0840 – Crypto News

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  • Euro adds to Thursday’s negative price action.
  • No respite for the sell-off in stocks markets in Europe on Friday.
  • EUR/USD plunges to multi-session lows near 1.0840.
  • Disheartening prints in the euro docket weigh on the pair.
  • The USD Index reclaims the 103.00 mark and beyond.

The Euro (EUR) and other assets with risk associations continue to face significant selling pressure, resulting in further decline for EUR/USD as it breaks through the important support level at 1.0900.

Since reaching its highest point above the psychological barrier of 1.1000 earlier this month, the currency pair has already dropped by more than one cent.

The Euro’s decline was intensified by disappointing figures from the advanced Manufacturing and Services Purchasing Managers’ Indices (PMIs) in France, Germany and the broader Euroland for June. These poor results reignited concerns about a possible recession in the region.

On the other hand, the US Dollar (USD) gained strength as the USD Index (DXY) reached new highs just above the 103.00 mark. This was supported by the prevailing bearish sentiment in the market and the consistent hawkish stance of Federal Reserve officials, including Chief Jerome Powell,

The focus of the macroeconomic discussion revolves around the potential future actions of both the Federal Reserve and the European Central Bank as they work toward normalizing their monetary policies. This comes amid increasing speculation about an economic slowdown on both sides of the Atlantic.

In addition to the pmi data release across the Atlantic, several Federal Reserve officials, including St. Louis Fed’s Jim Bullard (voter in 2025, hawk), Atlanta Fed’s Raphael Bostic (voter in 2024, hawk), and Cleveland Fed’s Loretta Mester (voter in 2024, hawkish), are scheduled to deliver speeches later in the North American session.

Daily digest market movers: Risk appetite remains subdued

  • The US Dollar’s recovery gathers fresh steam amid a risk-off mood.
  • Flash Manufacturing and Services PMIs in the core Eurozone disappoint in June.
  • Recession concerns, Chinese lagged recovery hurt traders’ sentiment.
  • Upcoming Fed-speak is likely to fan the flames of the hawkish narrative.

Technical Analysis: Euro risks extra losses near term

EUR/USD comes under heavy downside pressure, and the breakdown of the 1.0900 support has opened the door to a possible test of the interim 100-day SMA at 1.0807. The loss of the latter exposes a deeper pullback to the May low of 1.0635 (May 31) ahead of the March low of 1.0516 (March 15) and the 2023 low of 1.0481 (January 6).

If Euro bulls regain the upper hand, the next hurdle is then expected at the June peak of 1.1012 (June 22) prior to the 2023 high of 1.1095 (April 26), which is closely followed by the round level of 1.1100. North from here emerges the weekly top of 1.1184 (March 31, 2022), which is supported by the 200-week SMA at 1.1181, just before another round at 1.1200.

The constructive view of EUR/USD appears unchanged as long as the pair trades above the crucial 200-day SMA, today at 1.0563.

ECB FAQs

What is the ECB and how does it influence 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 for the region.
The ECB’s primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.

What is Quantitative Easing (QE) and how does it affect the Euro?

In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.
QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.

What is Quantitative Tightening (QT) and how does it affect the Euro?

Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.

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