Euro rate today (11/11): EUR/USD exchange rate continues to display a dogged resilience to selling pressure
Euro exchange rates are today once again showing a dogged resilience to the downside despite the ECB rate cut and strong US labour data that have increased the odds that the Fed will begin tapering its asset purchases as soon as December.
The euro dollar exchange rate is trading 0.15 pct higher at 1.3393. The euro pound exchange rate is 0.2 pct higher at 0.8362. See our latest article forecasting the euro pound rate to hit 0.80.
Please Note: All quotes here are derived from the wholesale spot markets. Your bank will charge a spread at their own discretion. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering more currency. Please find out more here.
Euro continues to hold major support levels
The triple whammy of the ECB rate cut, the French downgrade and the strong US employment report obviously took their toll on EUR/USD at the end of last week, "but the EUR has so far managed to hold above the major support area of 1.3230-80, and in spite of the news, forward points don’t suggests any major pressure for the EUR to move lower from here," says a forex note from Lloyds Bank Research.
So for now we would expect this area to hold.
"We continue to believe that a proper downtrend in EUR/USD will require some genuine increase in US yields or some return of major risk premia into the European market. For now, we have seen neither of these, so some corrective strength in EUR/USD may now be seen back to the 1.34 area," say Lloyds.
US yields predicted to climb higher this week
As Lloyds point out, US yields will be important for the euro to US dollar this week.
Analyst Lars Christensen at Danske Bank says he sees them edging higher:
"US Treasury yields rose significantly on Friday following the stronger
-than-anticipated labour market report that indicated private payrolls increased +212k in October for the largest gain since February, despite the government shutdown.
"This puts December tapering from the Fed back in play but much will depend on the strength of upcoming data and the progress towards reaching an agreement on next year’s budget ahead of the 13 December deadline. With few interesting data this week, plenty of attention will be paid to incoming Fed speeches.
"Further, Yellen’s confirmation hearing is scheduled for Thursday and the risks are skewed towards her delivering a more balanced message than the current very dovish interpretation of her stance. Overall, we expect US rate s to inch a bit higher this week on the back of the above mentioned factors."
Outlook for euro dollar remains week
Concerning the weekly outlook for the EUR/USD, the theme of a potentially weaker USD is picked up by Shaun Osborne at TD Securities in his weekly forecast note:
"EUR/USD price action retains a weak bias through the close of the week, even though the market is showing signs of steadying around the 100-day MA. Loss of short-term (40-day) moving aver age and trend channel support this week, alongside the break under the 1.3450/60 high/low support zone—pivotal
for the markets since mid-September’s break higher—all confer a negative undertone for price action.
"Short-term trend momentum signals are aligned across an array of the short-term studies now—hourly through daily—which suggests limited scope for a counter-trend rally at present.
"We rather think the market will remain contained to the low /mid 1.34 area if the EUR can gain at all next week but we fully expect selling interest to be strong on any rally from here. We look for the loss of support around 1.33 (1.3294 is the 50% retracement of the 1.28/1.38 rally) to signal quicker losses to 1.30 in the next 2-4 weeks."