- EUR/USD can lose ground as the US dollar receives support from the decrease in commercial tensions.
- President Trump announced an “important” commercial agreement with the United Kingdom, although key tariffs remain at 10%.
- The initial applications for unemployment subsidy in the US fell to 228,000 for the week that ended on May 3, slightly exceeding expectations.
The EUR/USD torque cut the daily losses and is being negotiated around 1,1230 during the Asian session on Friday. The pair depreciated as the US dollar (USD) found support in positive US economic data and signals of decreased commercial tensions.
The president of the USA, Donald Trump, announced an “important” commercial agreement with the United Kingdom (United Kingdom), although key tariffs are maintained at 10%, which has moderated market optimism. Attention now focuses on preliminary commercial conversations between the US and China scheduled for this weekend in Switzerland, but both parties have minimized the expectations of an advance.
Trump continues to adopt a firm position about China, particularly after naming a new envoy in Beijing. Although discussions about possible tariff exemptions are ongoing, US administration remains cautious, with Trump stating that “they are not looking for so many exemptions.”
In the Data Front, the initial applications for unemployment subsidy in the US fell to 228,000 for the week that ended on May 3, slightly below expectations and below the unpaid figure of the previous week of 241,000. The unemployed unemployed unemployment rate remained stable at 1.2%. However, the four -week mobile average rose to 226,000, and continuous unemployment requests fell at 29,000 to 1,879 million for the week that ended on April 26.
Meanwhile, the euro (EUR) is still under pressure as the markets value more and additional rate cuts by the European Central Bank (ECB), possibly as soon as at the June meeting. ECB officials have expressed concern about the economic perspectives of the euro zone, although they maintain confidence that inflation will return to the objective of 2% by the end of the year.
Euro Faqs
The euro is the currency of the 19 countries of the European Union that belong to the Eurozone. It is the second most negotiated currency in the world, behind the US dollar. In 2022, it represented 31 % of all foreign exchange transactions, with an average daily business volume of more than 2.2 billion dollars a day. The EUR/USD is the most negotiated currency pair in the world, with an estimate of 30 %of all transactions, followed by the EUR/JPY (4 %), the EUR/GBP (3 %) and the EUR/AU (2 %).
The European Central Bank (ECB), based in Frankfurt (Germany), is the Eurozone reserve bank. The ECB establishes interest rates and manages monetary policy. The main mandate of the ECB is to maintain price stability, which means controlling inflation or stimulating growth. Its main tool is the rise or decrease in interest rates. Relatively high interest rates (or the expectation of higher types) usually benefit the euro and vice versa. The GOVERNMENT BOOK of the ECB makes decisions about monetary policy in meetings that are held eight times a year. The decisions are made by the directors of the National Banks of the Eurozone and six permanent members, including the president of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the harmonized consumer prices index (IPCA), are an important economic indicator for the euro. If inflation increases more than expected, especially if it exceeds 2% of the ECB, it forces the ECB to rise interest rates to control it again. Relatively high interest rates compared to their counterparts usually benefit the euro, since they make the region more attractive as a place for global investors to deposit their money.
Published data measure the health of the economy and can have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer trust surveys can influence the direction of the single currency. A strong economy is good for the euro. Not only attracts more foreign investment, but it can encourage the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is weak, the euro is likely to fall. The economic data of the four largest economies in the euro zone (Germany, France, Italy and Spain) are especially significant, since they represent 75% of the economy of the euro area.
Another important fact that is published on the euro is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will gain value simply by the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
