- The euro reached a maximum of almost two months in 1,1495 after the decision of the ECB.
- The president of the ECB, Lagarde, surprised investors with an unusually aggressive message.
- Investors focus on non -agricultural payroll data from the US on Friday.
The EUR/USD is moderately quoting on Friday, moving close to the level of 1,1430 at the time of writing, after having reached levels close to 1,1500 the previous day. An aggressive statement from the European Central Bank (ECB) promoted the common currency on Thursday, but the market is becoming more cautious while waiting for the US Non -Agricultural Payroll (NFP) report that will be published later.
The ECB cut the interest rates at 25 basic points, reducing the rate of ease of deposit to 2.0% as expected widely after the monetary policy meeting on Thursday. However, President Christine Lagarde adopted an exceptionally aggressive tone, suggesting that the relaxation cycle could be almost finished.
Investors reduced their expectations of greater monetary relief of the ECB in the coming months, and the euro (EUR) recovered along with the appreciation of the German Treasury bonds.
The US dollar (USD), on the contrary, remained in a weak position, affected by a series of disappointing macroeconomic publications this week and the lack of advances in the negotiations of US President Donald Trump with his business partners.
The long -awaited phone call between Trump and Chinese President Xi Jinping has failed to advance in the uncertain commercial relationship between the two main economies of the world, but the positive comments of the Republican have contributed to calm investors.
Euro price today
The lower table shows the percentage of euro change (EUR) compared to the main currencies today. Euro was the strongest currency in front of the Japanese yen.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.16% | 0.16% | 0.26% | -0.08% | 0.12% | -0.12% | 0.12% | |
| EUR | -0.16% | 0.01% | 0.07% | -0.23% | -0.09% | -0.26% | -0.04% | |
| GBP | -0.16% | -0.01% | 0.04% | -0.23% | -0.09% | -0.26% | -0.05% | |
| JPY | -0.26% | -0.07% | -0.04% | -0.30% | -0.03% | -0.27% | -0.22% | |
| CAD | 0.08% | 0.23% | 0.23% | 0.30% | 0.20% | -0.03% | 0.19% | |
| Aud | -0.12% | 0.09% | 0.09% | 0.03% | -0.20% | -0.17% | 0.06% | |
| NZD | 0.12% | 0.26% | 0.26% | 0.27% | 0.03% | 0.17% | 0.22% | |
| CHF | -0.12% | 0.04% | 0.05% | 0.22% | -0.19% | -0.06% | -0.22% |
The heat map shows the percentage changes of the main currencies. The base currency is selected from the left column, while the contribution currency is selected in the upper row. For example, if you choose the euro of the left column and move along the horizontal line to the US dollar, the percentage change shown in the box will represent the EUR (base)/USD (quotation).
What moves the market today: the ECB indicates the end of the cycle
- The president of the ECB, Christine Lagarde, said Thursday that the Central Bank is “in a good position to navigate the uncertainties” and suggested that it is approaching at the end of the monetary relaxation cycle.
- As for economic perspectives, Lagarde warned about the downward risks for the economy and observed the highly uncertain perspective of inflation. However, his tone was more optimistic than in previous meetings, which led investors to reduce their hopes of greater relief in the coming months.
- Future markets now value only 20% probability of another rate cut in July, from approximately 30% before the meeting, according to Reuters data. The market is now committed to the possibility of only one more rate cut, which will probably take place in December.
- In the Eastern Economic Calendar, April Retail Sales will be the main attraction on Friday. Interannual consumption (yoy) is expected to continue to grow at a constant pace in April, 1.4%, after a growth of 1.5% in March.
- Apart from that, the ECB Lagarde will speak again, although it is unlikely to say something new, before the publication of the Gross Domestic Product (GDP) final of the Q1 of the Eurozone, which is expected to be reviewed to a quarterly growth of 0.4% from the previous estimate of 0.3%. The annual rate will probably be confirmed at 1.2%.
- However, the culminating point of the day will be the report of non -agricultural payrolls of the US, which will be closely followed after a series of weak US publications this week. Private payrolls are expected to have grown by 130,000 in May from the previous 177,000, but the unemployment rate could have increased to 4.3% from the previous 4.2%. The US dollar is likely to be more vulnerable to a negative surprise today.
Technical analysis: EUR/USD needs to be kept above 1,1400 to confirm the bullish bias
The EUR/USD is quoting in a positive trend, marking maximum and minimum higher since mid -May, as seen in the 4 -hour graph below. The torque found vendors at the psychological level of 1,1500 on Thursday, but the general trend remains positive despite the weakening of the bullish impulse.
The torque is going back on Friday, with cautious investors before the publication of the US non -agricultural payroll report, since prices approach a key support area in 1,1400 (round number, ascending trend line). Below there, the upward trend would be challenged, with the bassists focused on 1,1360 and 1,1315, which have been acting as support and resistance since mid -April.
Upwards, the resistances are in 1,1495, which limited recovery on Thursday, and the 261.8% Fibonacci extension in 1,1585.
BCE FAQS
The European Central Bank (ECB), based in Frankfurt (Germany), is the euro zone reserve bank. The ECB sets interest rates and manages the monetary policy of the region.
The main mandate of the ECB is to maintain prices stability, which means maintaining inflation around 2%. Its main tool to achieve this is to raise or lower interest rates. Relatively high interest rates often translate into a stronger euro, and vice versa.
The BCE Governing Council adopts monetary policy decisions in meetings that are held eight times a year. The decisions are adopted by the directors of the national banks of the euro zone and six permanent members, including the president of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can launch a political tool called Quantitative Easing (quantitative relaxation). The QE is the process by which the ECB prints euros and uses them to buy assets (normally state or business bonds) to banks and other financial institutions. The result is usually a weaker euro ..
The QE is a last resort when it is unlikely that a simple decrease in interest rates achieves the price stability objective. The ECB used it during the great financial crisis of 2009-11, in 2015 when inflation remained stubbornly low, as well as during the Coronavirus pandemic.
The quantitative hardening (QT) is the reverse of the QE. It is carried out after the QE, when economic recovery is underway and inflation begins to increase. While in the QE the European Central Bank (ECB) buys state and business bonds from financial institutions to provide liquidity, in the QT the ECB stops buying more bonds and stops reinvesting the main one that overcomes the bonds it already has. It is usually positive (or bullish) for the euro.
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.
