- The euro is receiving support from the weakness of the USD, with skeptical markets on the agreement between the US and China.
- Investors are reducing long positions in the US dollar before the publication of the IPC of the US of May.
- The EUR/USD remains undecided, looking for address between 1,1375 and 1,1455.
The EUR/USD has recovered previous losses during the first hours of the European session and is being negotiated at 1,1435 at the time of writing, approaching the maximum of the recent range, in 1,1455. The US dollar has ceded all the land earned after the news on an agreement between the US and China to reduce commercial tariffs.
The agreement, which returns both countries to the consensus of last month’s conversations in Geneva, still needs the ratification of US President Donald Trump and Chinese Prime Minister Xi Jinping.
The details of the agreement have been scarce, and the market has reacted with skepticism. The reaction of the torque remains restricted within the same range between 1,1375 and 1,1455 seen in the last two weeks.
Beyond that, a Federal Court of the United States said Trump’s broader tariffs will remain temporarily, at least until the judges decide on an initial decision of a lower court that declared them illegal a few weeks ago.
In the front of the economic calendar, the highlight will be the publication of the US Consumer Price Index (IPC) of May, which is expected to show that inflation accelerated moderately and could rekindle the fears of stagning.
Euro price today
The lower table shows the percentage of euro change (EUR) compared to the main currencies today. Euro was the strongest currency against the New Zealand dollar.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.11% | 0.00% | 0.13% | 0.08% | 0.16% | 0.33% | -0.07% | |
| EUR | 0.11% | 0.11% | 0.23% | 0.18% | 0.26% | 0.39% | 0.03% | |
| GBP | -0.00% | -0.11% | 0.12% | 0.11% | 0.17% | 0.30% | -0.09% | |
| JPY | -0.13% | -0.23% | -0.12% | -0.14% | 0.04% | 0.18% | -0.24% | |
| CAD | -0.08% | -0.18% | -0.11% | 0.14% | 0.11% | 0.22% | -0.21% | |
| Aud | -0.16% | -0.26% | -0.17% | -0.04% | -0.11% | 0.13% | -0.27% | |
| NZD | -0.33% | -0.39% | -0.30% | -0.18% | -0.22% | -0.13% | -0.39% | |
| CHF | 0.07% | -0.03% | 0.09% | 0.24% | 0.21% | 0.27% | 0.39% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the euro of the left column and move along the horizontal line to the US dollar, the percentage change shown in the box will represent the EUR (base)/USD (quotation).
What moves the market today: the markets are cautious before the US CPI figures.
- Commercial negotiations between the US and China have ended with a framework that, in the better In cases, it returns the situation to the consensus of Geneva last month. The market reaction has been far from enthusiastic.
- Wednesday’s approach will be in the US CPI figures, which are expected to have constantly increased at a rate of 0.2% month by month in May, with annual inflation accelerating to 2.5% from 2.3% of the previous month.
- The market will be particularly attentive to deviations in consumption inflation, as it will determine the short -term monetary policy plans of the Federal Reserve (FED). Futures markets anticipate that the Central Bank will maintain interest rates without changes in June and July, but are divided over the September decision.
- Apart from that, an interest of 39,000 million dollars of the US Treasury bonds will be observed with interest to 10 years, amid increasing concerns about the fiscal stability of the United States. The main approach will be in the demand for indirect bidders, which represented 71% of the May auction. A significant decrease in this could increase the bearish pressure over the US dollar.
- The European data published on Tuesday revealed a greater improvement than expected in the confidence of investors, which rose to 0.2 in June, from -8.1 in May and -19.5 in April, promoted by more optimistic expectations about the economic perspectives of the Eurozone.
- The policy head of the European Central Bank (ECB), Olli Rehn, declared that the Central Bank should focus on maintaining stable inflation in 2% and warned about complacency with respect to inflation perspectives. These comments reflect the statements of the president of the ECB, Christine Lagarde, after the meeting last week and limit the hopes of greater monetary relief in next month.
Technical analysis: EUR/USD remains afloat below 1,1455
EUR/USD It is consolidating profits after the rebound at the end of May, with the action of the price trapped within a range of 80 pips below 1,1455 since the beginning of June. The relative force index (RSI) is oscillating around level 50 in the 4 -hour graph, but rejection about 1,1500 last week and a bearish divergence suggest that bulls have lost impulse.
The pair is looking for address above 1,1400 on Wednesday with a key support in 1,1375 (near the minimum of June 6 and 10). A rupture of this level is needed to confirm a deeper correction towards 1,1315 (minimum of May 30) and 1,1215-1,1220 (Minimum of May 28 and 20).
On the positive side, the immediate resistance is at the maximum of June 3 in 1,1455, ahead of the maximum of June 5 in 1,1495.
FAQS inflation
Inflation measures the rise in prices of a representative basket of goods and services. General inflation is often expressed as an intermennsual and interannual percentage variation. The underlying inflation excludes more volatile elements, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. The underlying inflation is the figure on which economists focus and is the objective level of central banks, which have the mandate of maintaining inflation at a manageable level, usually around 2%.
The consumer price index (CPI) measures the variation in the prices of a basket of goods and services over a period of time. It is usually expressed as an intermennsual and interannual variation. The underlying IPC is the objective of the central banks, since it excludes the volatility of food and fuels. When the underlying IPC exceeds 2%, interest rates usually rise, and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually translates into a stronger currency. The opposite occurs when inflation falls.
Although it may seem contrary to intuition, high inflation in a country highlights the value of its currency and vice versa in the case of lower inflation. This is because the Central Bank will normally raise interest rates to combat the greatest inflation, which attracts more world capital tickets of investors looking for a lucrative place to park their money.
Formerly, gold was the asset that investors resorted to high inflation because it preserved their value, and although investors often continue to buy gold due to their refuge properties in times of extreme agitation in the markets, this is not the case most of the time. This is because when inflation is high, central banks upload interest rates to combat it. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in front of an asset that earns interest or place money in a cash deposit account. On the contrary, lower inflation tends to be positive for gold, since it reduces interest rates, making bright metal a more viable investment alternative.
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.
