The Euro continued its upward trajectory on Wednesday, climbing above 1.1770 against the US Dollar and marking a fourth consecutive day of gains. The move is largely attributed to broad-based weakness in the US Dollar, exacerbated by the shutdown of the US federal government earlier in the day.
Key Drivers: USD Under Pressure, Eurozone Inflation in Focus
The US Dollar remains on the back foot after a last-minute vote in the Senate failed to pass a stopgap funding bill, triggering a government shutdown. While the immediate economic impact is expected to be limited, a prolonged closure could delay key data releases, including Friday’s Nonfarm Payrolls report—an essential input for the Federal Reserve’s policy meeting later this month.
Tuesday’s JOLTS Job Openings data showed a slight uptick in vacancies to 7.22 million for August but also highlighted weaker hiring, with the hiring rate slipping to 3.2% from 3.3%. These mixed signals reinforce the narrative of a cooling labor market. Later today, the ADP Employment Change report is forecast to show a modest increase of 50,000 private-sector jobs in September, well below recent historical averages.
In the Eurozone, attention turns to September’s preliminary Harmonized Index of Consumer Prices (HICP), due at 09:00 GMT. The data is expected to show a slight uptick in headline inflation to 2.2% year-on-year, up from 2.0% in August. Core inflation is projected to remain steady at 2.3%.
Expectations for an upside surprise grew after German CPI figures on Tuesday exceeded forecasts, rising to 2.4% YoY from 2.2% previously. The German HICP also accelerated to 2.4%, outpacing the 2.2% consensus. This has bolstered speculation that the Eurozone reading could beat expectations, potentially strengthening the hawkish case within the European Central Bank (ECB).
Currency Market Snapshot: Euro Outperforms
As of mid-day Wednesday, the Euro is the strongest performer among major currencies, gaining notably against the Australian Dollar and US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.19% | -0.14% | -0.35% | -0.05% | +0.14% | -0.16% | -0.22% | |
| EUR | +0.19% | +0.06% | -0.16% | +0.14% | +0.34% | +0.05% | -0.04% |
Heat map: Positive % = base currency stronger; Negative % = base currency weaker.
EUR/USD Technical Outlook: Eyes on 1.1790
EUR/USD is trading with a bullish bias, supported by technical indicators. On the 4-hour chart, the Relative Strength Index (RSI) has climbed to 64, indicating positive momentum. The MACD is also bullish, maintaining a position above its signal line.
Currently, the pair is testing resistance near Tuesday’s high at 1.1760. A sustained break above this level would open the door to the next upside target at 1.1790—the reverse trendline broken earlier in September. A move beyond this could invalidate the recent bearish trend and shift focus to the 1.1820 area, last seen in late September.
On the downside, initial support lies around 1.1710–1.1715, with further demand expected near last week’s lows at 1.1645–1.1655. A deeper decline could bring the September 2–3 lows near 1.1610 into view.
Looking Ahead
With the US Dollar pressured by political uncertainty and signs of labor market softness, all eyes will now turn to the Eurozone’s inflation print. A stronger-than-expected reading could add fuel to the Euro’s rally and reinforce expectations of ECB tightening, potentially pushing EUR/USD closer to the 1.18 mark in the short term.