Euro keeps the bid bias in place around 1.0700, Dollar remains slightly offered.

The Euro keeps gyrating around the 1.0700 region vs. the US Dollar.

Stocks in Europe now trade broadly on the defensive.EUR/USD meets initial resistance around 1.0730.The USD Index (DXY) puts the 105.00 region to the test.Final August CPI in Germany matched the preliminary readings.

Wholesale Inventories, Consumer Credit Change come next in the US docket.

On Friday, the Euro (EUR) manages to gain some upward momentum against the US Dollar (USD), propelling EUR/USD back above the 1.0700 level as the week draws to a close.

The Greenback experienced a partial retreat from its six-month highs above the 105.00 threshold, as indicated by the USD Index (DXY), due to a modest recovery in risk appetite among investors and amidst the absence of a clear direction in the US bond market.In terms of monetary policy, the speculation surrounding a potential interest rate hike by the Federal Reserve (Fed) in November seems to have lost some momentum. Meanwhile, market participants are still factoring in the likelihood of rate cuts taking place sometime in the second quarter of 2024.

As for the European Central Bank (ECB), there is a notable amount of market discussion suggesting that the upcoming meeting on September 14 may result in a pause, given the divided views within the Council.In the euro docket, final inflation figures in Germany saw the CPI rise at a monthly 0.3% in August and 6.1% over the last twelve months, unchanged from the preliminary estimates, while Industrial Production in France expanded by 0.8% MoM in July.Across the pond, US Wholesale Inventories and Consumer Credit Change data are due.

Daily digest market movers: Euro remains under pressure ahead of ECB event The EUR shows some signs of life against the USD.US, German yields appear tilted to the downside early on Friday.Investors see the ECB keeping the deposit rate unchanged this month.Dallas Fed President Lorie Logan favours a pause in September.

NY Fed President John Williams expects the Unemployment Rate to increase to more than 4%.Markets continue to price in Fed rate cuts in Q2 2024.

Strikes at Chevron LNG plants kick in today.Final GDP Growth Rate in Japan came in at 4.8% YoY.

Technical Analysis: Euro keeps the door open to a drop to 1.0635

EUR/USD is trading with modest gains in the vicinity of the 1.0700 area on Friday after hitting multi-week lows near 1.0680 in the previous session.

Should the EUR/USD manage to breach Thursday’s at 1.0685, it may retest the May 31 low of 1.0635 before potentially reaching the March 15 low of 1.0516. A breakdown of the latter level could trigger a possible test of the 2023 low at 1.0481 from January 6.

Conversely, in terms of upward movement, the current focus is on targeting the critical 200-day Simple Moving Average (SMA) at 1.0822. Beyond that, bullish momentum may lead to a challenge of the August 30 level at 1.0945, which is further bolstered by the provisional 55-day SMA at 1.0945. Subsequently, this could set the stage for a move towards the psychological level of 1.1000 and the August high at 1.1064. If the pair manages to clear this area, it might alleviate some of the bearish pressure and potentially aim for the July 27 peak at 1.1149 ahead of the 2023 top at 1.1275 from July 18.

As long as the EUR/USD remains below the 200-day SMA, a sustained decline in the pair is probable.

GERMAN ECONOMY FAQS

What is the effect of the German Economy on the Euro?

The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany’s economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany’s economy strengthens, it can bolster the Euro’s value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro’s strength and perception in global markets.

EDITORS’ PICKS

EUR/USD holds steady near 1.0700 amid softer US Dollar

EUR/USD trades in a tight channel at around 1.0700 in the second half of the day on Friday. The US Dollar keeps its corrective downside intact alongside the US Treasury bond yields. In the absence of high-tier data releases, the pair’s action could be driven by week-end flows.

EUR/USD News

GBP/USD struggles to reclaim 1.2500 ahead of the weekend

GBP/USD clings to small daily gains but finds it difficult to surpass 1.2500 on Friday. The cautious market stance helps the US Dollar limit its corrective losses in the early American session and makes it difficult for the pair to gather recovery momentum.

GBP/USD News

Gold maintains its bid tone around $1,925 area, lacks follow-through

Gold price stays in positive territory above $1,920 but finds it hard to extend its rebound. The benchmark 10-year US Treasury bond yield holds steady above 4.2% following Thursday’s pullback, limiting XAU/USD’s volatility ahead of the weekend.