Euro picks up pace and reclaims 1.0850 prior to NFP, US ISM – Crypto News – Crypto News
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Will the pair reach parity ahead of the weekend? Will the pair reach parity ahead of the weekend?

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Euro picks up pace and reclaims 1.0850 prior to NFP, US ISM – Crypto News

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  • The Euro bounces off lows near 1.0830 vs. the US Dollar.
  • Stocks in Europe start the session in an upbeat mood.
  • EUR/USD rebounds from 1.0830 as risk appetite improves.
  • The USD Index (DXY) looks offered in the mid-103.00s.
  • US and German yields trade without a clear direction.
  • No surprises from the final Manufacturing PMIs in Germany, EMU.
  • US Nonfarm Payrolls, ISM manufacturing are next of note.

Following a drop to the 1.0830 region, the Euro (EUR) now manages to regain some balance vs. the US Dollar (USD) and motivates EUR/USD to retake the 1.0850 region at the end of the week.

The so far modest advance in the pair comes in line with the offered stance in the Greenback, while the USD Index (DXY) gyrates around the 103.50 zone amidst the lack of a clear direction in US yields across different maturities.

In the meantime, investors continue to reprice a pause by the Federal Reserve in its tightening campaign, while the upcoming release of the Nonfarm Payrolls for the month of August should lend further insight into this current view.

Back to the European Central Bank (ECB), there is a great deal of uncertainty regarding the potential steps beyond the summer, all amidst a pretty divided Council and rising speculation that a stagflation scenario could be brewing in the region.

Data-wise in the region, final Manufacturing PMIs in Germany and the euro area came in at 39.1 and 43.5, respectively, for the month of August.

Later in the NA session, Nonfarm Payrolls, Unemployment Rate and the ISM Manufacturing PMI will take centre stage, followed by Construction Spending and the final S&P Global Manufacturing PMI.

Daily digest market movers: Euro bounces off three-day lows

  • The EUR gathers some fresh oxygen vs. the USD.
  • Final PMIs in Europe broadly matched the preliminary prints.
  • China’s Caixin Manufacturing PMI returned to expansionary territory.
  • PBoC reduced the FX RRR to 4% to support the Chinese yuan.
  • Investors’ focus shifts to NFP, ISM Manufacturing.
  • Investors now see the Fed on hold for the remainder of the year.

Technical Analysis: Euro could advance further once 1.0950 is cleared

EUR/USD regains some upside traction following Thursday’s strong pullback and three-day lows near 1.0830.  

In case bulls regain the upper hand and EUR/USD surpasses the weekly top of 1.0945 (August 30), the pair is expected to meet the provisional 55-day SMA at 1.0965 prior to the psychological 1.1000 barrier and the August top at 1.1064 (August 10). Once the latter is cleared, spot could challenge the weekly peak at 1.1149 (July 27). If the pair surpasses this region, it could alleviate some of the downward pressure and potentially visit the 2023 peak of 1.1275 (July 18). Further up comes the 2022 high at 1.1495 (February 10), which is closely followed by the round level of 1.1500.

The resumption of the downward bias could motivate the pair to initially test the key 200-day SMA at 1.0815 ahead of the August low of 1.0765 (August 25). The breach of the latter exposes the May low of 1.0635 (May 31) prior to the March low of 1.0516 (March 15) and the 2023 low at 1.0481 (January 6).

Furthermore, sustained losses are likely in EUR/USD once the 200-day SMA is breached in a convincing fashion.

Euro FAQs

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.
EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the 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.

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.
Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all 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 put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.
Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Another significant data 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 over a given period.
If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

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