- The EUR/USD collapses to about 1,1355 in the first Asian session on Wednesday, lowering 0.58% in the day.
- Trump said he had no intention of saying goodbye to Powell from the Fed, despite being frustrated with high interest rates.
- Operators increase bets to a ECB rates cut at the June meeting.
The EUR/USD torque attracts some sellers around 1,1355 during the first Asian session on Wednesday, pressured by the renewed demand of the US dollar (USD). The dollar recovers after US president Donald Trump said he had no intention of saying the president of the Federal Reserve (Fed), Jerome Powell, despite his frustration with the Central Bank for not acting more quickly to cut the interest rates.
The White House said Tuesday that the Trump administration was progressing in the negotiations of trade agreements aimed at reducing the wide tariffs he announced earlier this month. The US press secretary, Karoline Leavitt, said that 18 different countries have presented commercial offers to the US and that Trump’s commercial team was meeting with 34 countries this week to discuss possible agreements. The positive developments around the US commercial conversations with their commercial partners raise the USD and act as a wind against the main torque.
In addition, the hard line comments of the FED officials contribute to the drum impulse. The governor of the Fed Board, Adriana Kugler, said Tuesday night that, since US import tariffs are significantly higher than expected and probably exert upward pressure on prices, the US Central Bank should maintain stable short -term indebted costs until inflation risks decrease.
On the other side of the Atlantic, the growing expectation that the European Central Bank (ECB) could cut interest rates again at the June policy meeting weighs on the shared currency. The operators are now valuing almost 75% probabilities of a rate cut in June, compared to approximately 60% before the ECB decision, according to LSE data.
Investors will keep an eye on the preliminary reading of the purchase managers index (PMI) of HCOB of the Eurozone and Germany for April, which will be published later on Wednesday. In the US economic agenda, the preliminary PMIs of manufacturing and global S&P services will be published for April.
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.
