EUR/USD rises as Eurozone GDP beats estimates, German inflation accelerates
- EUR/USD rises sharply above 1.0800 on faster-than-expected Eurozone Q3 GDP growth.
- The German economy returns to growth, while the French economy rose by 0.4%, as expected.
- Trump’s victory in the US presidential election could have an adverse impact on the Eurozone growth.
EUR/USD gains sharply to near 1.0850 in Wednesday’s European session as the Euro's (EUR) outlook has improved after upbeat Eurozone flash Q3 Gross Domestic Product (GDP) data. The report showed that the economy expanded at a faster-than-expected pace in the third quarter of the year. The Eurozone economy grew by 0.4%, faster than estimates and the former release of 0.2%. Compared to the same quarter of the previous year, the economy expanded 0.9% against 0.6% growth in the April-June period. Economists expected the shared continent to have grown by 0.8%.
Higher growth in the Eurozone economy came from a surprise German economic expansion, its largest nation. The German economy unexpectedly rose in the third quarter by 0.2% after contracting in the April-June period. The French economy grew by 0.4%, as expected, while the Italian growth was flat.
Meanwhile, the October preliminary Harmonized Index of Consumer Prices (HICP) data from Germany and six of its states has come in hotter-than-expected. Surprisingly positive Q3 Eurozone GDP and hot German inflation data have dampened expectations of the European Central Bank's (ECB) larger-than-usual interest rate cut of 50 basis points (bps) in December. According to market expectations, the probability of the ECB reducing interest rates by 50 bps eases to 22% from 45% after the German data release.
Recent commentaries from policymakers have indicated that they are worried about inflation remaining persistently lower due to weakening economic growth. Meanwhile, the uncertainty over the Eurozone economic outlook continues to persist ahead of the US presidential election on November 5. While national polls have indicated tight competition between former US President Donald Trump and current Vice President Kamala Harris, traders seem to be pricing in a Trump victory, which would have deep repercussions also for the Eurozone.
Trump has promised a universal 10% tariff on all imports, except those from China, which would face even bigger tariffs. The threat of tariffs could impact the Eurozone’s powerful export sector significantly. Investment banking firm Goldman Sachs projects a 1% drop in the Eurozone’s GDP if a universal 10% tariff is imposed.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. The Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | 0.31% | -0.32% | 0.04% | -0.26% | -0.27% | -0.02% | |
| EUR | 0.14% | 0.45% | -0.17% | 0.19% | -0.12% | -0.13% | 0.12% | |
| GBP | -0.31% | -0.45% | -0.63% | -0.27% | -0.58% | -0.58% | -0.31% | |
| JPY | 0.32% | 0.17% | 0.63% | 0.36% | 0.05% | 0.03% | 0.30% | |
| CAD | -0.04% | -0.19% | 0.27% | -0.36% | -0.31% | -0.32% | -0.05% | |
| AUD | 0.26% | 0.12% | 0.58% | -0.05% | 0.31% | -0.00% | 0.25% | |
| NZD | 0.27% | 0.13% | 0.58% | -0.03% | 0.32% | 0.00% | 0.27% | |
| CHF | 0.02% | -0.12% | 0.31% | -0.30% | 0.05% | -0.25% | -0.27% |
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: EUR/USD rise while US Dollar's rally pauses
- EUR/USD rises as the rally in the US Dollar (USD) appears to have stalled. The USD faces pressure after weak United States (US) JOLTS Job Openings data for September has renewed fears of pain in the labor market. The US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, drops to near 104.20.
- Tuesday’s Job Openings data showed fresh vacancies stood at 7.443 million, lower than estimates of 7.99 million and the prior release of 7.861 million. Weak job openings pointed to a slower labor demand, which kept Federal Reserve (Fed) dovish bets for the remaining year afloat. According to an October 23-29 Reuters poll, the Fed will cut interest rates by 25 basis points (bps) in policy meetings in November and December.
- For more interest rate cues, investors will focus on the ADP Employment Change and the flash US Q3 GDP data, which will be published in the North American session. Economists expect the private sector to have added 115K new workers in October, lower than 143K in September. Meanwhile, the US economy is expected to have grown at a steady pace of 3.0% on an annualized basis.
- Later this week, investors will keep an eye on the Nonfarm Payrolls and the ISM Manufacturing PMI data for October, and the Personal Consumption Expenditure Price Index (PCE) data for September.
Technical Analysis: EUR/USD jumps above 1.0800
EUR/USD climbs above 1.0800 in European trading hours on Wednesday. The shared currency pair continues to hold above the upward-sloping trendline near 1.0750, which is plotted from the October 3, 2023, low at around 1.0450 on the daily time frame. However, the broader outlook of the major currency pair remains bearish as it stays below the 200-day Exponential Moving Average (EMA), which trades around 1.0900.
The downside move in the shared currency pair started after a breakdown of a Double Top formation on the daily time frame near the September 11 low at around 1.1000, which resulted in a bearish reversal.
The 14-day Relative Strength Index (RSI) remains in the 20.00-40.00 range, pointing to more downside ahead.
On the downside, the major pair could see more weakness towards the round-level support of 1.0700 if it slips below 1.0750. Meanwhile, the 200-day EMA near 1.0900, and the psychological figure of 1.1000 emerge as key resistances.
Forex News
Keep up with the financial markets, know what's happening and what is affecting the markets with our latest market updates. Analyze market movers, trends and build your trading strategies accordingly.
