- The EUR/USD quotes in positive territory about 1,1720 in the first Asian session on Monday.
- The consumer spending in the US fell unexpectedly in May, undermining the US dollar.
- Retail sales and inflation data of the ipc in Germany will be the points highlighted later on Monday.
The EUR/USD pair extends the rebound to around 1,1720 during the first hours of Monday’s Asian negotiation, backed by a weaker US dollar (USD). The dollar weakens against the euro (EUR) since the operators are convinced that the Federal Reserve (FED) will cut the rates at the September meeting. The publication of retail sales data and consumer price index (CPI) will be at the Center for Care later on Monday.
The data published on Friday showed that personal spending in the US fell unexpectedly in May, the second fall of this year. Meanwhile, personal income in the US fell 0.4% in May, the highest decrease since September 2021. Operators are committed to the US Central Bank.
On the other side of the Atlantic, the member of the Governing Council of the European Central Bank (ECB), Klaas Knot, said Friday that the current interest rate is “a good place to be”, adding that at least one cuts are anticipated more than 25 basic points (PBS) towards the end of 2025. After this comment, the swap market continues to assess only a cut of 25 pbs by the ECB in the next 12 months, with the expected policy rate to play bottom around 1.75%.
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.
