- EUR/USD drops slightly below 1,1300 while the US dollar is strengthened after the announcement of the Fed that you are not in a hurry to cut interest rates.
- The US president Trump is ready to reveal a bilateral commercial agreement, supposedly with the United Kingdom, on Thursday.
- The EU prepares against US tariffs to compensate for their costs.
EUR/USD drops below 1,1300 during Thursday’s European negotiation hours. The main currency pair moves down while the US dollar (USD) is listed slightly up to the signals of the Federal Reserve (Fed) that there is no hurry to lower interest rates, which was announced on Wednesday just after the Central Bank kept interest rates without changes in the range of 4.25% -4.50% for the third time.
The US dollar index (DXY), which measures the value of the dollar against six main currencies, rises about 100.00.
The president of the FED, Jerome Powell, declared that “the uncertainty about economic perspectives has increased even more” due to the consequences of the tariffs announced by the president of the United States (USA) Donald Trump, who have biased “The risks for both inflation and upward unemployment.” Therefore, Powell advised that the right thing for Fed is now “expecting more clarity.”
According to the CME Fedwatch tool, the operators are sure that the Fed will also keep the stable interest rates at the June policy meeting, but they see about 66% probability that interest rates are lower than the current levels in July.
Meanwhile, investors expect the announcement of the first bilateral commercial agreement by the White House under the leadership of the US president Trump. On Wednesday, Trump declared through a publication on Truth. Social that his team has closed an agreement with one of its commercial allies, which will be public on Thursday at 14:00 GMT. According to a New York Times report (NYT), the Commercial Partner will be the United Kingdom (UK). This contradicts what Trump pointed out last week on the Newsnation television network, which India, South Korea and Japan would be the first countries to close trade agreements.
However, participants in the financial market focus mainly on commercial discussions between the US and China, which are scheduled for Saturday in Switzerland. The US Treasury Secretary, Scott Besent, and commercial representative Jamieson Greer confirmed that they will meet with their Chinese counterparts, with the aim of disparaging the commercial war.
What moves the market today: Eur/USD low marginally while the US dollar rises
- EUR/USD is slightly down while the US dollar moves up. Although investors have supported the USD in front of the euro (EUR), the latter is surpassing its peers. The main currency remains firm before the publication of the countermeasures by the Commission of the European Union (EU) against US Tariffs on Thursday.
- On Wednesday, “tomorrow we will announce the next preparatory steps, both in the area of ​​possible rebalancing measures, as well as in the important areas for future discussions,” said European Commissioner Maros Sefcovic, according to Reuters. Sefcovic clarified that the main priority of the continent are trade negotiations with the US, but not at any cost.
- A Bloomberg report showed on Tuesday that the EU plans to impose additional tariffs on US goods worth approximately 100 billion euros if commercial conversations do not achieve a satisfactory result for the block.
- While the euro manages to overcome its peers, its rise is expected to remain limited since the European Central Bank (ECB) is expected to continue with the monetary expansion cycle. The operators are increasingly sure that the ECB will reduce interest rates again at the June meeting.
- ECB officials have expressed concerns about the economic perspectives of the Eurozone, while they are confident that inflation will return sustainably to the 2% target of the Central Bank by the end of the year.
Technical analysis: EUR/USD maintains the 20 -day EMA key
EUR/USD drops below 1,1300 on Thursday. The pair continues to maintain the 20 -day exponential mobile average (EMA) around 1,1260.
The 14-day relative force (RSI) index falls within the range of 40.00-60.00, indicating that the bullish impulse has concluded for now. However, the upward trend still prevails.
Looking up, the psychological level of 1,1500 will be the main resistance for the torque. On the contrary, the maximum of September 25, 1,1214 will be a key support for the euros of the euro.
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
This contradicts what Trump pointed out last week on the Newsnation television network, which India, South Korea and Japan would be the first countries to close trade agreements.
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.
