EUR/USD dips into new 2024 lows as Consumer Confidence metrics sour
- EUR/USD declines into five-week lows as safe haven flows pick up the Greenback.
- PMI figures from both the EU and the US due on Wednesday.
- ECB rate call to take center stage on Thursday, US PCE inflation on Friday.
The EUR/USD tumbled into fresh lows for 2024, hitting its lowest bids in nearly six weeks after the Euro extended broad-market declines on the back of souring consumer sentiment and declining bank lending activity confirmed by the latest Bank Lending Survey from the European Central Bank (ECB).
Europe saw extended declines in the Euro (EUR) after the ECB confirmed that business and lending activity in the euro area continued to decline. High interest rates exacerbated overall declines in bank lending activity across the continent, and European banks further tightened lending conditions through the fourth quarter of 2023.
Daily digest market movers: EUR/USD backslides as bad data releases pile up
- The European Consumer Sentiment Index declined to -16.1 in January versus the forecast rebound from December’s -15.0 to .14.3.
- The US Richmond Fed Manufacturing Index also declined to its lowest level in nearly four years in January, printing at -15 compared to December’s -11 and missing the market’s forecast recovery to -7.
- The ECB’s latest Bank Lending Survey showed bank lending activity declined further in the fourth quarter, with high interest rates and souring consumer sentiment specifically highlighted as key triggers.
- The ECB noted that European banks have broadly tightened lending conditions, squeezing credit access that has already seen slumping demand.
- Overall loan demand from both businesses and households is expected to decline further in 2024’s first quarter.
- Lending activity declines slowed in the fourth quarter, but continue to slowdown, exacerbating declines in economic activity.
- Wednesday brings Purchasing Managers’ Index (PMI) figures for both the euro area and the US.
- Markets are hoping the pan-European HCOB Composite PMI sees a slim gain from 47.6 to 48.0.
- The euro area’s Composite PMI has been in sub-50.0 contraction territory since July.
- US Services PMI is expected to decline slightly from 51.4 to 51.0.
- ECB descends on markets with its latest rate call on Thursday.
- Market expectations of steep and dep rate cuts from the ECB have been pushed back by central bank officials constantly warning that market hopes for rate cuts have run too far ahead of what policymakers can deliver.
Euro price today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the Canadian Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.30% | 0.20% | -0.09% | 0.02% | 0.16% | -0.11% | 0.21% | |
| EUR | -0.30% | -0.11% | -0.40% | -0.29% | -0.14% | -0.40% | -0.09% | |
| GBP | -0.20% | 0.10% | -0.30% | -0.19% | -0.05% | -0.32% | 0.01% | |
| CAD | 0.09% | 0.40% | 0.29% | 0.11% | 0.24% | -0.02% | 0.31% | |
| AUD | -0.02% | 0.29% | 0.18% | -0.13% | 0.14% | -0.13% | 0.20% | |
| JPY | -0.16% | 0.13% | 0.02% | -0.27% | -0.15% | -0.28% | 0.05% | |
| NZD | 0.08% | 0.42% | 0.32% | 0.03% | 0.13% | 0.24% | 0.29% | |
| CHF | -0.23% | 0.09% | -0.02% | -0.31% | -0.20% | -0.05% | -0.34% |
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 Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Technical Analysis: EUR/USD gets knocked back sharply from 1.0900 once again
The EUR/USD fell below the 1.0900 handle on Tuesday for the third time in less than a week after the pair saw a sharp rejection from the 200-hour Simple Moving Average (SMA) near 1.0915, shedding over eight-tenths of a percent top-to-bottom.
Tuesday’s decline sees the EUR/USD pair taking a bear run into the 200-day SMA after falling away from the 50-day SMA near 1.0920. EUR/USD intraday volatility sees the pair in rough consolidation trading between the 50-day and 200-day SMAs, and an extended decline will see the pair making a run at the last swing low near 1.0750.
EUR/USD Hourly Chart
EUR/USD Daily Chart
ECB FAQs
What is the ECB and how does it influence 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 for the region.
The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger 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.
What is Quantitative Easing (QE) and how does it affect the Euro?
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro.
QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
What is Quantitative tightening (QT) and how does it affect the Euro?
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.