Market news

21 November 2023

Euro advances to three-month highs around 1.0960, looks at ECB, Fed

  • The Euro extends the upside bias vs. the US Dollar.
  • European stocks open in a mixed tone on Tuesday.
  • The FOMC Minutes, ECB Lagarde will grab all the attention later in the day.

The Euro continues its upward trend against the US Dollar, pushing EUR/USD towards new three-month peaks around 1.0960, a level unseen since mid August.

On the other side of the coin, the Greenback, in terms of the USD Index (DXY), intensifies its decline following the recent breakdown of the crucial 200-day SMA and approaches the key contention area of 103.00.

The Dollar's persistent decline is happening amidst minimal downward bias in US yields across the curve. This decline is fueled by growing speculation about a potential Federal Reserve (Fed) interest rate cut in spring 2024, which remains underpinned by lower-than-expected inflation indicators (CPI and PPI) released last week.

On the euro docket, European Central Bank’s (ECB) President Christine Lagarde will speak on “Inflation kills democracy” in Germany.

Across the ocean, the FOMC Minutes of the November 1 meeting takes centre stage seconded by Existing Home Sales and the Chicago Fed National Activity Index.

Daily digest market movers: Euro opens the door to extra upside

  • The EUR accelerates its gains vs. the USD on Tuesday.
  • US and German yields kicked off the session on the defensive.
  • Investors continue to price in interest rate cuts by the Fed in Q1 2024.
  • Markets now expect the ECB to extend its pause until early next year.
  • The RBA Minutes came in on the hawkish side.

Technical Analysis: Euro now shifts its attention to 1.1000

EUR/USD extends the bullish move to fresh multi-week tops past 1.0960 on Tuesday.

The November high of 1.0965 (November 21) is currently just ahead of the psychological milestone of 1.1000 for EUR/USD. Further north, the pair might run into the August top of 1.1064 (August 10) and another weekly peak of 1.1149 (July 27), all of which precede the 2023 high of 1.1275 (July 18).

On the other hand, occasional bearish rallies should find first support at the key 200-day SMA at 1.0806, seconded by the temporary 55-day SMA at 1.0648. South of here, the weekly low of 1.0495 (October 13) appears before the 2023 low of 1.0448 (October 3).

Overall, the pair's chances should stay strong as long as it continues above the 200-day SMA.

Euro FAQs

What is the Euro?

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%).

What is the ECB and how does it impact 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.
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.

How does inflation data impact the value of the Euro?

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.

How does economic data influence the value of the Euro?

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.

How does the Trade Balance impact the Euro?

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.

Market Focus
Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.
Open Demo Account
I understand and accept the Privacy Policy and agree that my name and contact details can be used by TeleTrade to contact me about the information I have selected.

© 2011-2023 Top Markets Solutions Ltd

This website is operated by Top Markets Solutions Ltd which is registered with the Department of Registrar of Companies and Intellectual Property of the Companies of the Republic of Cyprus as a private limited company with registration number HE272810 and is authorized by the Cyprus Securities and Exchange Commission ("CySEC") to act as a licensed Cyprus Investment Firm ("CIF") with license number 158/11. Top Markets Solutions Ltd operates in accordance with Markets in Financial Instruments Directive (MiFID).

In accordance with CySEC Circular C108, please be informed that the previous name of Top Markets Solutions Ltd was TeleTrade-DJ International Consulting Ltd.

The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Top Markets Solutions Ltd ("the Company") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.

The Company cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.

The Company currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime. The Company does not provide its services to residents or nationals of the USA.

Please read our full Terms of Use.

To maximise our visitors' browsing experience, The Company uses cookies in its web services. By continuing to browse this site you agree to our use of cookies.

Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63.37% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63.37% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Choose your language/location