- EUR/USD remained stuck in the 1,1300 region on Wednesday.
- It was widely expected that the Fed maintained the rates, but an excessively cautious Powell surprised the markets.
- Investors still have the hope of a turn to feat cuts for July.
EUR/USD remained in their intermediate roads on Wednesday, remaining entrenched near the 11300 zone after the last decision of Federal Reserve (Fed) was as the operators expected, although with a new batch of warnings of “waiting and seeing” of the president of the Fed, Jerome Powell. The economic calendar of the European side is still strictly medium level this week, leaving Fiber operators sitting and reflecting on a Fed that is becoming more and more cautious.
Powell of the Fed: The right thing is to expect more clarity
The recent announcement of Fed rates highlights that, although employment and economic activity in the US are still strong, concerns about occupational and production risks have increased, mainly due to uncertainty related to tariffs and business policies of the US. temporarily pushing EUR/USD at higher levels.
However, the feeling of the market decreased after the press conference of the president of the FED, Jerome Powell. He emphasized that if US commercial tariffs remain, they will hinder the objectives of the Fed for inflation and employment during the rest of the year.
President Powell also warned that continuous uncertainty in politics will probably lead Fed to adopt a position to ‘wait and see’ about interest rates. Despite the significant negative impacts on the confidence of consumers and companies caused by Trump administration tariff policies, real economic data have shown little adverse effect, complicating the logic of the Fed for any immediate adjustment of interest rates.
According to the CME Fedwatch tool, market participants still anticipate a quarter -point rate cut in July. However, the probability of maintaining stable rates in July has increased to 30%, which decreases generalized market expectations for a soft transition towards a new cycle of feat cuts.
EUR/USD price forecast
EUR/USD has found an interim fund just above the 1,1200 zone, reinforcing the price action towards the 1,1300 region. Fiber has retreated from maximum of several months just north of 1,1500, but the downward impulse is still limited while the euro operators expect key market developments before pressing too much in any direction.
EUR/USD daily graphics
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.
