At a Glance
- EUR/USD is trading higher near 1.1630 as the US Dollar (USD) corrects following a US-China trade meeting without a deal.
- The US Dollar Index (DXY) has retraced to approximately 99.00.
- The Euro (EUR) is trading firmly ahead of the European Central Bank’s (ECB) monetary policy announcement.
- Investors await Eurozone Q3 GDP and German HICP data before the ECB decision.
- The Federal Reserve recently cut interest rates by 25 basis points.
EUR/USD Gains as Dollar Dips
The EUR/USD currency pair experienced an upward movement, trading approximately 0.25% higher and nearing the 1.1630 level during late Asian trading on Thursday. This gains momentum for the major currency pair as the US Dollar (USD) undergoes a correction. The dollar’s weakness stems from the recent conclusion of a meeting between United States President Donald Trump and Chinese leader Xi Jinping, which ended without a trade deal being signed.
Currently, the US Dollar Index (DXY), a benchmark that tracks the Greenback’s value against six major global currencies, has shown a retracement, moving back towards the 99.00 mark.
US Dollar Performance Against Major Currencies
The US Dollar (USD) was observed to be the weakest against the New Zealand Dollar earlier today, reflecting shifts in market sentiment. Detailed percentage changes of the USD against other major currencies are presented in the table below.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.22% | -0.11% | 0.14% | -0.06% | -0.25% | -0.33% | -0.16% | |
| EUR | 0.22% | 0.10% | 0.36% | 0.16% | -0.03% | -0.11% | 0.05% | |
| GBP | 0.11% | -0.10% | 0.26% | 0.06% | -0.13% | -0.22% | -0.05% | |
| JPY | -0.14% | -0.36% | -0.26% | -0.22% | -0.39% | -0.50% | -0.34% | |
| CAD | 0.06% | -0.16% | -0.06% | 0.22% | -0.18% | -0.28% | -0.11% | |
| AUD | 0.25% | 0.03% | 0.13% | 0.39% | 0.18% | -0.08% | 0.09% | |
| NZD | 0.33% | 0.11% | 0.22% | 0.50% | 0.28% | 0.08% | 0.19% | |
| CHF | 0.16% | -0.05% | 0.05% | 0.34% | 0.11% | -0.09% | -0.19% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
President Trump indicated a tariff reduction on imports from China, decreasing from 57% to 47%, and confirmed that Beijing would continue exporting rare earths to Washington.
Euro Shows Strength Ahead of ECB Decision
The Euro (EUR) is trading with notable strength against most currencies, excluding the antipodean pairs. This positive movement precedes the upcoming monetary policy announcement from the European Central Bank (ECB) scheduled for 13:15 GMT. Analysts widely expect the ECB to maintain its Deposit Facility rate steady at 2%, given the broadly stable inflationary pressures in the Eurozone economy, which are hovering near the 2% target.
Leading up to the ECB’s policy decision, market participants will be closely monitoring key economic data releases. These include the preliminary Gross Domestic Product (GDP) figures for the Eurozone’s third quarter and the Harmonized Index of Consumer Prices (HICP) for Germany in October, both scheduled for release at 10:00 GMT and 13:00 GMT, respectively.
Federal Reserve’s Recent Policy Move
On Wednesday, the Federal Reserve (Fed) executed a 25 basis points (bps) interest rate reduction. The new target range for the federal fund rate is now 3.75%-4.00%. The Fed described this move as a risk management cut and signaled that further reductions are unlikely in the December meeting.
Understanding the European Central Bank
ECB FAQs
The European Central Bank (ECB), headquartered in Frankfurt, Germany, serves as the reserve bank for the Eurozone. The ECB is responsible for setting interest rates and managing monetary policy for the region. Its primary mandate is to ensure price stability by maintaining inflation around 2%. The main tool utilized by the ECB to achieve this objective is the adjustment of interest rates; higher rates typically strengthen the Euro, while lower rates tend to weaken it. The ECB Governing Council, comprising the heads of national banks within the Eurozone and six permanent members including the President, makes monetary policy decisions during eight scheduled meetings annually.
Quantitative Easing (QE) is an extraordinary policy tool that the European Central Bank (ECB) can implement in extreme economic circumstances. This process involves the ECB creating new Euros to purchase assets, typically government or corporate bonds, from banks and other financial institutions. QE generally leads to a depreciation of the Euro. It is considered a measure of last resort when lowering interest rates alone is insufficient to achieve price stability. The ECB has previously employed QE following the Great Financial Crisis (2009-2011), in 2015 amidst persistent low inflation, and during the COVID-19 pandemic.
Quantitative Tightening (QT) is the inverse of Quantitative Easing (QE). It is typically implemented when an economic recovery is underway and inflation begins to rise. While QE involves the ECB purchasing bonds to inject liquidity, QT signifies the ECB halting new bond purchases and ceasing to reinvest the principal from maturing bonds it already holds. This process is generally considered positive or bullish for the Euro.
Final Thoughts
The EUR/USD pair is showing resilience as the US Dollar experiences a correction, influenced by the lack of a trade deal between the US and China. Market attention now shifts to the upcoming ECB monetary policy decision and key Eurozone economic data, while the Fed’s recent rate cut provides a backdrop to global monetary policy trends.