- The EUR/USD lowers Thursday and stops the rebound from the previous day from a minimum of more than a week.
- A change in the feeling of global risk provides some support to the USD and weighs on the torque.
- The operators now expect the US Personal Consumption Expenditure Index (PCE) to obtain an impulse before the ECB next Thursday.
The EUR/USD pair struggles to capitalize on the solid rebound from the previous day from the neighborhood of 1,1200, or a minimum of a week and a half, and is negotiated with a slight negative trend during Friday’s Asian session. Cash prices are currently around half of the 1,1300, with a fall of almost 0.15% in the day, although the fall is still cushioned.
After the dramatic change of the previous day, the US dollar (USD) attracts some buyers in search of opportunities in the midst of flight to security and turns out to be a key factor that acts as a wind against for the Eur/USD torque. A Federal Court of Appeals suspended a ruling from a separate trade court and restored the broad commercial tariffs of US President Donald Trump late on Thursday. This adds a layer of uncertainty in the markets and revives the demand for traditional refuge assets.
The Usd rebound, however, lacks bullish conviction in the midst of concerns about the worsening of the US fiscal condition and expectations that the Federal Reserve (FED) will reduce the costs of indebtedness again in 2025. The shared currency, on the other hand, continues to receive some support from the decision of the US President Donald Trump to delay the imposition of tariffs to the European Union (EU), which contributes to limit the fall of the EUR/USD.
Looking ahead, attention focuses on the publication of the US Personal Consumption Expenditure Index (PCE). Crucial data will play a key role in the influence of expectations on the FED fees cutting path, which, in turn, will boost the demand of the USD and will provide an impulse to the EUR/USD to the weekend for the weekend. Market attention will then be transferred to the crucial monetary policy meeting of the European Central Bank (ECB) next Thursday.
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.
