EUR/USD holds gains with markets muted in key week for the Federal Reserve
- The Euro maintains a moderate bid tone, with downside attempts capped at 1.1640.
- Hawkish comments by ECB Schnabel and upbeat German factory data have supported the Euro.
- The US Dollar remains on the defensive, with markets bracing for a Fed rate cut on Wednesday.
EUR/USD is trading higher on Monday, but remains within last week's range, changing hands at 1.1665 at the time of writing after bouncing from 1.1630 lows on Friday. A moderate risk appetite is supporting the Euro, although market volatility remains subdued with the US Federal Reserve (Fed) front and center this week.
The Fed is widely expected to cut rates by 25 basis points on Wednesday, with Chairman Jerome Powell highly likely to show a hawkish stance, pressured by the sticky inflation levels. The Federal Open Market Committee (FOMC), however, is expected to show an unusual amount of dissenters on both sides of the spectrum, which muddies the central bank's path forward.
In the Eurozone, hawkish comments by the European Central Bank's Executive Board member Isabel Schnabel and the positive surprise in the German Industrial Production release have provided additional support to the Euro. Later in the day, the Eurozone Sentix Investor's Confidence index might give further guidance to the Euro.
In the US, the calendar is practically void on Monday. On Tuesday, the weekly ADP Employment Report and the JOLTS Job Openings data are likely to provide further context to the Fed's decision, considering that November's Nonfarm Payrolls report will not be released until next week.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | 0.02% | -0.06% | -0.04% | -0.07% | -0.16% | -0.11% | |
| EUR | 0.14% | 0.16% | 0.07% | 0.10% | 0.07% | -0.02% | 0.03% | |
| GBP | -0.02% | -0.16% | -0.08% | -0.06% | -0.09% | -0.18% | -0.13% | |
| JPY | 0.06% | -0.07% | 0.08% | 0.01% | -0.02% | -0.11% | -0.06% | |
| CAD | 0.04% | -0.10% | 0.06% | -0.01% | -0.03% | -0.13% | -0.06% | |
| AUD | 0.07% | -0.07% | 0.09% | 0.02% | 0.03% | -0.09% | -0.04% | |
| NZD | 0.16% | 0.02% | 0.18% | 0.11% | 0.13% | 0.09% | 0.05% | |
| CHF | 0.11% | -0.03% | 0.13% | 0.06% | 0.06% | 0.04% | -0.05% |
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: Fed easing hopes keep the US Dollar on the defensive
- The Euro is on a bullish trend from mid-November lows, buoyed mainly by generalised weakness in the US Dollar. Investors are almost fully pricing a quarter-point rate cut by the Fed on Wednesday and a few more in 2026. Meanwhile, the rest of the world's major central banks, including the ECB, are at the end of this easing cycle.
- Futures markets are pricing an 88% chance that the Fed will cut rates by 25 basis points on Wednesday, according to the CME Group's Fed Watch Tool. The odds for further easing in January are only 24%, which suggests that Chairman Powell might deliver a hawkish message, underscoring the upside risks to inflation.
- ECB board member Isabel Schnabel confirmed this view on Monday, saying that she feels comfortable with investors' bets that the central bank's next move will be a rate hike. "The Eurozone economy has been much more resilient than could have been expected," she said.
- German Industrial Production data has endorsed Schnabel's comments. Factory Output grew by 1.8% in October, beating market expectations of a 0.4% contraction and following a 1.1% rise in September. These figures ease concerns about the momentum of the region's leading economy and provide further support to the common currency.
- Earlier on Monday, data from China revealed that exposts grew 5.9% in November, following an unexpected contraction in October, which shows that the world's second-largest economy is coping well with US tariffs. These figures have boosted market sentiment during the Asian session, adding pressure on the safe-haven USD.
Technical Analysis: EUR/USD consolidates gains around 1.1650
EUR/USD's immediate trend remains bullish. The pair remains supported by the ascending trendline from November 20 lows, yet with the 1.1680 resistance area holding bulls. The 4-hour Relative Strength Index (RSI) remains steady above the 50 level, currently near 60, although the Moving Average Convergence Divergence (MACD) is below the signal line, indicating a mild negative momentum.
Bulls need to breach the December high at 1.1682 to extend their rally towards the October 17 high, near 1.1730, ahead of the October 1 high at 1.1778.
On the downside, immediate support is at the confluence of trendline support, now at 1.1640, and Friday's low at 1.1630. Further down, December 1 and 2 lows around 1.1590 are likely to be retested ahead of the November 26 and 28 lows in the 1.1550-1.1555 area.
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.