Monthly Wrap: EUR – Euro volatile amid mixed picture for Eurozone economy

Philip McHugh November 9th 2023 - < 1 minute read

Key takeaways:

  • Mixed economic data causes changeable movement in EUR
  • USD volatility adds to turbulence around the euro
  • EUR monthly lows: £0.86, $1.05, AU$1.64, NZ$1.75, C$1.43
  • EUR monthly highs: £0.87, $1.07, AU$1.68, NZ$1.82, C$1.47

The euro was fairly muted through the middle of October, as Eurozone economic data releases were in short supply.

This left EUR to be driven by its negative correlation with the US dollar, with volatility in USD creating turbulence for the single currency.

Mixed data towards the end of the month added to the choppy movement. Weaker Eurozone PMIs and German consumer confidence dented EUR, while a stronger German business climate indicator offset the downside.

The European Central Bank (ECB) decision at the end of the month saw EUR slip. The ECB paused its hiking cycle, as expected, with analysts predicting that the bank was finished raising rates.

The common currency recouped losses after German GDP beat forecasts, but Eurozone GDP showed a contraction in the bloc’s economy while inflation cooled more than expected, piling fresh pressure on the euro.

The subsequent pullback in ECB bets, paired with some lacklustre data releases, saw EUR struggle through early November. However, a weaker US dollar spared the euro steeper losses.

Looking forward, the Eurozone’s latest consumer price index at the end of November is one of the key releases. Another cooldown in inflation could cement bets that the ECB has ended its hiking cycle, which may weigh heavily on EUR.

The latest flash PMIs could also dent the euro, if they report an ongoing contraction in Eurozone business activity.

Finally, a number of German economic releases over the next four weeks could also affect EUR. The common currency may face volatility if Germany continues to publish mixed data.

Written by
Philip McHugh

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