EUR/USD Gains Ground as US Dollar Declines
Headline
The Euro (EUR) has gained ground against the US Dollar (USD) as the greenback continues its downward trajectory, driven by factors including weaker-than-expected Initial Jobless Claims data and concerns over rising inflation.
Economic Indicators
- Initial Jobless Claims: Slightly higher Initial Jobless Claims data for the week ending February 14 weighed on the US Dollar. Individuals claiming jobless benefits for the first time came in higher at 219K than estimates of 215K.
- FOMC Minutes: Federal Open Market Committee (FOMC) minutes for the January meeting revealed that policymakers hesitated to continue easing monetary policy amid concerns over a sticky inflation outlook.
- Fiscal Policy: US President Donald Trump's ongoing tariff agenda has kept investors on their toes. Trump has imposed tariffs on steel, aluminum, and imports from China, with further tariffs threatened.
Monetary Policy Outlook
- ECB: ECB executive board member Isabel Schnabel expects the central bank to pause its policy-easing cycle as risks to inflation have skewed upside.
- Fed: FOMC Minutes show policymakers concerned about the potential for inflation to persist, indicating a hawkish stance that should support the US Dollar.
Technical Analysis
- EUR/USD: The currency pair trades within a defined range, with support at the 50-day Exponential Moving Average (EMA) around 1.0430. Bulls need to push the RSI (14) above 60.00 for a sustained bullish momentum.
- USD: The US Dollar Index (DXY) has declined to near 106.90, indicating a continuation of its downtrend.
Market Movers
- EUR/USD Gains: The Euro benefits from the decline in the US Dollar and optimism surrounding a potential Russia-Ukraine truce.
- US Dollar Weakness: The greenback remains weak despite geopolitical concerns, as Trump's economic policies and weaker economic data continue to weigh.
Key Data Upcoming
- Flash Purchasing Managers Index (PMI): Friday's release of PMI data for February will provide further insights into the health of both the US and Eurozone economies.
Table: Major Currency Performance Against USD
| Currency | Change Against USD |
|---|---|
| EUR | 0.23% |
| GBP | 0.21% |
| JPY | 0.86% |
| CAD | 0.15% |
| AUD | 0.44% |
| NZD | 0.55% |
| CHF | 0.19% |
Conclusion
The EUR/USD currency pair continues to exhibit a bullish trend, supported by factors such as the decline in the US Dollar and expectations of a pause in monetary easing by the ECB. However, potential headwinds remain, including ongoing geopolitical tensions and Trump's tariff policies. Investors are advised to monitor key data releases and monitor market sentiment to assess the direction of the currency pair in the coming days.