The Euro shows moderate losses on Wednesday, retreating to 1.1985 at the time of writing, from over four-year highs at 1.2082 hit on Tuesday. The US Dollar is picking up as the impact of US President Donald Trump’s comments, praising the US Dollar’s (USD) depreciation, diminishes, and the chances of further European Central Bank (ECB) monetary easing increase.
ECB board member Martin Kocher put a lid on the Euro rally, opening the doors to a further interest rate cut in July if the common currency’s appreciation starts to undermine the bank’s inflation projections. Eurozone money markets have boosted the odds of a July rate cut to 25% from around 15% on Tuesday, according to data released by Reuters.
The pair had rallied about 1.24% on Tuesday after Trump said in a visit to Iowa that the current US Dollar value “is great” and that the currency has not fallen too low, which provided investors with fresh reasons to sell the Greenback.
The focus on Wednesday shifts to the Federal Reserve (Fed), which is widely expected to leave interest rates unchanged, although investors’ attention is likely to be on the bank’s autonomy. The US president’s plans to replace Jerome Powell with a more dovish Fed chairman, the efforts to oust Fed Governor Lisa Cook, and the criminal investigation have put the independence of the central bank into question.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.30% | 0.26% | 0.15% | -0.03% | 0.05% | 0.17% | 0.36% | |
| EUR | -0.30% | -0.04% | -0.16% | -0.33% | -0.25% | -0.13% | 0.06% | |
| GBP | -0.26% | 0.04% | -0.08% | -0.29% | -0.21% | -0.09% | 0.10% | |
| JPY | -0.15% | 0.16% | 0.08% | -0.18% | -0.11% | 0.00% | 0.20% | |
| CAD | 0.03% | 0.33% | 0.29% | 0.18% | 0.08% | 0.20% | 0.39% | |
| AUD | -0.05% | 0.25% | 0.21% | 0.11% | -0.08% | 0.12% | 0.30% | |
| NZD | -0.17% | 0.13% | 0.09% | -0.01% | -0.20% | -0.12% | 0.18% | |
| CHF | -0.36% | -0.06% | -0.10% | -0.20% | -0.39% | -0.30% | -0.18% |
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: The Euro remains firm despite dovish ECB comments
- ECB official Martin Kocher has brought interest rate cuts back to the table, undermining the Euro’s strength, although the impact on the EUR/USD has been mild. The US Dollar remains vulnerable, amid a combination of Trump’s erratic trade policies, higher government spending and his will to influence the Fed’s monetary policy, altogether eroding the status of the US Dollar as a reserve currency.
- Apart from that, markets remain wary about a potential US-Japan coordinated intervention to support the Japanese Yen. News of rate checks by the Fed and the Bank of Japan (BoJ) on Friday acted as the strongest intervention warning so far this year and prompted speculative investors to scale down their USD/JPY long positions.
- US macroeconomic data failed to support the Greenback on Tuesday. The Conference Board’s Consumer Confidence index fell by 9.7 points to 84.5 in January, its lowest level in more than 11 years, from an upwardly revised 94.2 in December, weighed by increased concerns about the labour market and the rising prices.
- The US ADP Employment Change 4-week average endorsed those views, as net jobs decreased for the third consecutive week, to an average of 7,750 jobs per week, from 8,000 the previous week.
- In the economic calendar on Wednesday, the highlight is the outcome of the Fed’s monetary policy meeting. The bank is widely expected to leave rates at the current 3.50%-3.75% range and hint at steady rates for the foreseeable future. The questions about the bank’s independence and the replacement of chairman Powell, whose term ends in May, are likely to grab investors’ attention.
Technical Analysis: EUR/USD looks ripe for a correction
The EUR/USD pair has found resistance at the 251.8% Fibonacci extension of the January 16-20 uptrend, in the 1.2080 area. This is a common exhaustion level, which, together with the oversold momentum indicators, points to a potential correction, or at least some consolidation. Downside attempts, however, remain contained above the 1.1980 so far.
Technical indicators show an overstretched rally. The Moving Average Convergence Divergence (MACD) line keeps trending higher on the 4-hour chart, but the Relative Strength Index (RSI) is well above 70, levels that might cap further advances.
Bears should break intraday lows of 1.1980 to confirm a correction and shift the focus towards the January 26 high at 1.1907. On the upside, above Tuesday’s high at 1.2082, there is no clear resistance until the 2021 peak, in the 1.2165 area.
(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.