- The EUR/USD loses land about 1,1480 in the first Asian session on Monday.
The safe refuge flows amid the risk of escalation in the Israel-Iran conflict boost the US dollar.
Those responsible for the ECB policy indicated a pause in the fees in July.
The EUR/USD torque weakens around 1,1480 during the first Asian session on Monday. The dollar advances in front of the euro (EUR) as the decision of the US President Donald Trump to join the Israel war against Iran drastically scale the conflict. The operators will closely follow the developments around the conflict in the Middle East.
United States (USA) entered the conflict between Israel and Iran during the weekend, with American warplanes and submarines attacking three Iranian facilities in Iran, Fordo, Natanz and Isfahan. Trump said that the main nuclear enrichment facilities in Iran had been “totally destroyed” and warned “much greater” attacks unless they would accept to make peace. The growing tensions after the bombardment of Iran’s nuclear sites drive the secure refuge currency such as the dollar and act as a wind against the main torque.
On the other side of the Atlantic, the European Central Bank (ECB) cut the interest rates for the eighth time in a year earlier this month to support a slow recovery in the euro zone, but clearly pointed out a pause in July. The president of the ECB, Christine Lagarde, said that rates reductions are coming to an end, since the Central Bank is now “in a good position” to deal with the prevailing uncertainties. The hard line tone could help limit short -term euro losses.
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.
