Currency Exchange Rates: Dollar Falls, Euro Remains Uncertain [ABO]


Economic Situation

Taux de change : le dollar recule, l’euro sous pression - Depositphotos.com Auteur fotoscool

PONANT


Prices rose by 3.7% in a year in the United States in September, after 3.4% in August, and the American currency nevertheless lost ground. The reference rate published by the European Central Bank set one euro at 1.1253 dollars on Friday, i.e. 0.42% higher than seven days earlier. Dollar-denominated services, including North American hotels and cruises, have therefore eased slightly.

This acceleration is almost entirely due to gasoline, whose price jumped by 9.1% in a month: by itself it explains more than half of the rise. Excluding energy and food, the year-over-year increase stands at 2.6%. The U.S. Federal Reserve, the Fed, can therefore wait before another rate hike, allowing time to ensure that expensive fuel does not push up other prices.

Investors reassessed this in three days. On Wednesday, they were still assigning roughly a 50% chance of a rate increase on October 28. Several Fed officials then judged there was no urgency, and Kevin Warsh, who leads the institution, did not want to reveal the decision in advance on Friday. The probability fell back to around 15%, and lower expected rates make the dollar less attractive.

The American stock market did the rest. Technology stocks fell 4.5% in a week and distrust spread to the bonds financing data centers. Investors sought refuge in U.S. government debt, not in the country’s currency.

Crude oil rose 4.9%: Europe, which buys its energy abroad, loses on this, but expensive energy makes a December European rate hike more likely, supporting the euro. The dollar, in our view, can still weaken if this American credit malaise persists; it would rise if it spread worldwide.



Exchange Rates: The Technical Update

The euro is losing ground this Monday morning against each of the currencies we track, likely due to the violence that erupted during the French demonstrations.

It trades at 0.9253 Swiss francs, 0.8421 pounds, 1.1225 dollars and 1.5847 Canadian dollars. In addition, 177.47 yen are required to buy one euro. Last week, the euro had already fallen 0.45% against the pound and 0.44% against the franc: it is not strong, it is the dollar that has weakened.

We anticipate the European currency moving from 1.1105 to 1.1350 dollars by Friday. The lower bound assumes France borrows more expensively before Moody’s rating review, while the upper bound assumes the American credit strain worsens without spreading to other countries. Four central banks are due to speak next week, and inactivity dominates: a US hold is deemed likely at 84% by markets, and among 73 economists surveyed by Reuters, 70 expect no change on the European side. It is therefore better to stagger dollar purchases rather than committing everything before these meetings.

South Africa, entering its peak season, leaves little room for European buyers. The rand stood around 16.44 per dollar on Friday, up 0.3% for the day, supported by gold and platinum prices, the country’s two main exports. The dollar, for its part, recorded its first weekly decline in five weeks. It now takes about 18.5 rands to buy one euro, slightly less than at the start of September. A safari or a Cape Town circuit priced in rands yields no additional margin on departures already sold.


WEEKLY SUPPORTS WEEKLY RESISTANCES
S2 S1 R1 R2
EUR/USD 1,1105 1,1150 1,1270 1,1350
EUR/GBP 0,8340 0,8385 0,8460 0,8505
EUR/CHF 0,9170 0,9210 0,9300 0,9340
EUR/CAD 1,5730 1,5780 1,5945 1,6020
EUR/JPY 175,70 176,60 178,40 179,30


The supports and resistances shown below indicate, respectively, the low and high points within which prices are expected to move during the week.



The information presented in this publication is provided purely for informational purposes and does not constitute investment advice, nor a sales offer, nor a purchase solicitation, and should in no case be used as a basis or be considered as an incentive to engage in any investment.


Mondial Change is a French financial institution, founded in 2015, specializing in the management of international payments and exchange risk.

Mondial Change also supports numerous tourism sector players, travel agencies, group organizers, tour operators, and incoming operators…

www.mondialchange.com

Contact : [email protected]


Why Falling Oil Prices Could Change the Game in the Currency Markets [ABO]


Economic Situation

Pourquoi la baisse du pétrole pourrait changer la donne sur le marché des devises - Depositphotos.com, Auteur yellow_man

CroisiEurope


May will be remembered for an historic move in oil. Brent fell by roughly 19% over the month, dipping back to around $92, marking its worst monthly performance since March 2020.

The engine behind this retreat is diplomatic: Washington and Tehran reportedly reached a preliminary agreement to extend their 60-day ceasefire and reopen the Strait of Hormuz, through which about a fifth of global oil and LNG passes. Tehran would commit to clearing the passage of mines within 30 days. An important caveat: Trump has not yet endorsed the terms, and JD Vance tempered the prevailing optimism. Nothing has been signed.

This pullback changes the inflation equation. Energy had been fueling the price spiral since the outbreak of the conflict at the end of February. If the price of crude stabilizes at a lower level for a sustained period, inflationary pressures should mechanically ease in the coming months.

And yet, the ECB is preparing to tighten on June 11, with a market-implied 90% probability. A 25 basis-point rise would lift the deposit rate from 2.00% to 2.25%, the first tightening since 2023. Why tighten when the energy shock is receding? Because the ECB does not react to yesterday’s oil, but to today’s inflation.

In April, harmonized inflation rose to 3.0% across the euro area, and May flash estimates show a persistent acceleration in France, Italy and Spain. The figures are in, and some governors would have argued for a hike as early as April.

And the euro, meanwhile, remains stuck below 1.17, caught between diplomatic optimism and Frankfurt’s monetary resolve.



Exchange Rates: The Technical View

When oil plunges, safe-haven currencies give up their gains first. The Swiss franc is the clearest example: EUR/CHF has risen to around 0.9105 after peaking near 0.90 during the crisis. The flight-to-safety pressure is easing, and the SNB, with its policy rate at zero, allows it to stand by.

EUR/USD remains stuck around 1.1654, near a six-week low. As long as the Fed keeps its range at 3.50%-3.75% with no hint of easing, the dollar maintains a yield advantage that outstrips every other factor. Technically, the 1.1550-1.1600 area acts as support: below it, the path to 1.1500 opens.

Above this, the 100-day moving average near 1.1720 caps any rebound. EUR/GBP hovers around 0.8650, with no significant underlying movement. EUR/CAD sits near 1.5980: the Canadian dollar is naturally exposed to oil, and a persistently lower oil price would weaken it, thereby mechanically supporting the pair. Finally, EUR/JPY around 185.5 is the issue to watch this week.

The Governor of the Bank of Japan is due to speak soon, and any signal about the continuation of Japan’s monetary normalization could wake a yen that has notably lagged.


WEEKLY SUPPORTS WEEKLY RESISTANCES
S2 S1 R1 R2
EUR/USD 1.1500 1.1580 1.1720 1.1800
EUR/GBP 0.8560 0.8610 0.8700 0.8750
EUR/CHF 0.9020 0.9060 0.9150 0.9200
EUR/CAD 1.5850 1.5920 1.6050 1.6130
EUR/JPY 183.50 184.50 186.50 188.00


The supports and resistances shown below indicate, respectively, the low and high points within which prices are expected to move over the course of the week.



The information presented in this publication is provided for informational purposes only and does not constitute investment advice, an offer to buy or sell, or a solicitation to engage in any investment activity.


Mondial Change is a French financial institution, founded in 2015, specializing in the management of international payments and foreign exchange risk.

Mondial Change also supports many players in the tourism sector: travel agencies, group organizers, tour operators, inbound operators…

www.mondialchange.com

Contact: [email protected]