- The EUR/USD found a slight technical support in 1,1300 on Tuesday.
- The important decision of the Fed fees on Wednesday is coming in the middle of the week.
- The Fed is expected to maintain rates, but the markets expect a change in the Fed speech.
The EUR/USD moved through Tuesday’s market action, marking a new short -term consolidation range near the key zone of 1,1300 while Fiber traders expect a reason to move. The Federal Reserve (FED) rates in the middle of the week is the key data event this week, maintaining the feeling of investors chained to their position at the moment.
The next decision of Fed rates on Wednesday remains the main approach for markets this week. While many expect the Fed to maintain the current rates, the investors will closely monitor the comments of those responsible for the policy, especially of the president of the Fed, Jerome Powell, in search of any indication that a change towards a cycle of feat cuts could occur before anticipated.
Recently, the Fed has faced a growing pressure to reduce interest rates. Market participants constantly seek lower financing costs, while the Trump administration has been remarkably vocal, insisting that the Fed should lower the rates to relieve US debt service expenses of the US debt. However, this position contradicts the dual mandates of the Fed to promote full employment and control price stability, points that seem to be overlooked by President Donald Trump.
EUR/USD price forecast
The EUR/USD seems to have found an interim fund just above the 1,1200 area, with the action of the price supported north of the 1,1300 region. Fiber has decreased from the maximum of several months registered just north of 1,1500, but the downward impulse remains limited while the euros of the euro 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.
