Select Language

EUR/USD falls apart on Wednesday in post-election Greenback rush

Breaking news

EUR/USD falls apart on Wednesday in post-election Greenback rush

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2024.11.07 08:18
EUR/USD falls apart on Wednesday in post-election Greenback rush

update 2024.11.07 08:18

  • EUR/USD plummeted nearly 2% on Wednesday as markets bid up the US Dollar.
  • Fiber saw one of its worst days in years as markets struggle to find a reason to buy the Euro.
  • EU economic calendar remains tepid, leaving markets to focus on Fed rate cuts.

EUR/USD plummeted during the midweek market session, falling over 1.75% into the red and tumbling back below 1.0750 for the first time since July. Markets have broadly pivoted into the Greenback following clear results from this week's US presidential election that sees former President Donald Trump as the frontrunner.

EU-based market data remains relatively limited this week. Pan-EU Retail Sales figures are due on Thursday, with this week's EU leaders' summit set to wrap up on Friday and a follow-up appearance from ECB President Lagarde slated for Saturday when the market will be closed.'

The US presidential election still isn't over, and some key battlegrounds will take some time before a final call is made, but markets are confident that the outcome has been decided, with Republican candidate and former President Donald Trump set to win 276 electoral votes. With the Republicans also set to win back both the US Senate and Congress, investors are anticipating a pro-growth environment with more deregulation as well as additional or extended business tax cuts.

Another Federal Reserve (Fed) rate call looms ahead this week. Fed Chair Jerome Powell is widely expected to deliver another quarter-point cut to interest rates on Thursday, bringing the Fed Funds Rate down 25 bps to 4.75%. The Fed Funds Rate peaked at 5.5% in July of 2023, and investors have been clamoring for a return to a low interest rate environment that has become familiar territory since US interest rates clattered to an all-time low near 0% in early 2009.

The University of Michigan's (UoM) Consumer Sentiment Index is waiting in the wings and slated for release on Friday. Investors expect November's UoM sentiment indicator to climb to a six-month high of 71.0 from the previous month's 70.5.

EUR/USD price forecast

The EUR/USD daily chart reveals a considerable setback, as the currency pair faced a sharp rejection around the 50-day EMA, currently at 1.0929, and has dropped below both the 50-day and 200-day EMAs. This technical pullback reflects a cautious outlook for the euro, particularly given recent challenges faced by the eurozone economy, including concerns over slowing growth and inflation. The strong bearish candlestick observed in the latest session suggests a swift return of market caution, as the euro failed to sustain momentum above critical moving averages.

Looking at momentum indicators, the MACD line is currently above the signal line, but recent weakness has caused the histogram bars to contract, reflecting a loss of upward momentum. The MACD's proximity to the zero line hints at the potential for a shift in sentiment; should the MACD cross into negative territory, it may signal a further downturn for EUR/USD. Investors appear wary, as current price action implies that upward moves are likely to face resistance amid prevailing market uncertainties, aligning with broader risk aversion.

In the event of further weakness, traders should keep an eye on the 1.0700 level, which marks a psychological support area and could be crucial in gauging future market sentiment. If EUR/USD holds above this support, it may encourage a period of consolidation as the market assesses broader economic data and policy signals. However, a break below could amplify selling pressure, potentially drawing the currency pair toward the year's lows around 1.0600, especially if the eurozone's macroeconomic picture remains subdued. Conversely, for a bullish scenario to re-emerge, the euro would need to reclaim the 1.0900 level with sustained buying interest.

EUR/USD daily chart 

Euro FAQs

The Euro is the currency for the 19 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.

 


Date

Created

 : 2024.11.07

Update

Last updated

 : 2024.11.07

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

USD/INR retreats ahead of Fed rate decision

The Indian Rupee (INR) rebounds on Thursday. Nonetheless, the upside of the local currency might be limited amid a rally in the US Dollar (USD) and higher bond yields, which are bolstered by Donald Trump's victory in the US presidential elections.
New
update2024.11.07 11:46

Japanese Yen bulls remain on the sidelines despite intervention fears

The Japanese Yen (JPY) struggles to register any meaningful recovery against its American counterpart and languishes near the lowest level since July 30.
New
update2024.11.07 11:25

Japan's Top FX Diplomat Mimura: Closely watching FX moves with a high sense of urgency

Atsushi Mimura, Japan's Vice Finance Minister For International Affairs and top foreign exchange official, said on Thursday, he is "closely watching FX moves with a high sense of urgency." He added that he is "ready to take appropriate actions for excess FX moves if necessary." Market reaction USD/JPY eased off 154.72, its intraday high, losing 0.11% on the day to trade near 154.50 following these verbal warnings.
New
update2024.11.07 10:53

Australian Dollar remains tepid following a lower Trade Balance, Trump's victory

The Australian Dollar (AUD) remains subdued against the US Dollar (USD) for the second successive session on Thursday following the Trade Balance data.
New
update2024.11.07 10:45

WTI drifts lower to near $71.50 on the bullish US Dollar

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.45 on Thursday.
New
update2024.11.07 10:25

PBOC sets USD/CNY reference rate at 7.1659 vs. 7.0993 previous

The People's Bank of China (PBoC) set the USD/CNY central rate for the trading session ahead on Thursday at 7.1659, as compared to the previous day's fix of 7.0993 and 7.1679 Reuters estimates.
New
update2024.11.07 10:16

Australia's Trade Surplus decreases to 4,609M MoM in September vs. 5,300M expected

Australia's trade surplus decreased to 4,609M MoM in September versus 5,300M expected and 5,644M in the previous reading, according to the latest foreign trade data published by the Australian Bureau of Statistics on Thursday.
New
update2024.11.07 09:39

NZD/USD weakens below 0.5950 on stronger US Dollar, eyes on Fed rate decision

The NZD/USD pair softens to around 0.5940 during the early Asian trading hours on Thursday.
New
update2024.11.07 09:16

EUR/USD falls apart on Wednesday in post-election Greenback rush

EUR/USD plummeted during the midweek market session, falling over 1.75% into the red and tumbling back below 1.0750 for the first time since July.
New
update2024.11.07 08:17

RBA's Bullock: Too early to judge US election, tariff implications

Reserve Bank of Australia Governor Michele Bullock said on Thursday that it's premature to assess the impact of the US presidential election outcome and tariff implications.
New
update2024.11.07 08:15

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel