- EUR/USD depreciates as the US dollar (USD) recovers its losses due to technical correction.
- The European Union warned that Trump’s new plan to double American tariffs on steel and aluminum could derail bilateral commercial negotiations.
- The USM manufacturing PMI of the USA fell to 48.5 in May from 48.7 in April.
EUR/USD yield after registering more than 0.50% of profits in the previous session, quoting around 1,1420 during the Asian hours on Tuesday. The US dollar (USD) recovers land for a technical correction, despite the growing concerns about the stagflation in the USA (USA.). The operators will probably observe the data of the Harmonized Index of Consumer Price (HICP) of the Eurozone scheduled to be published on Tuesday. The attention will move towards the publication of Jolts employment offers later in the American session.
The president of the United States, Donald Trump, threatened Friday with doubleing import tariffs on steel and aluminum, which will enter into force on Wednesday, to increase pressure on global steel producers and intensify the commercial war. “We are going to impose an increase of 25%. We will take it from 25% to 50% – the tariffs on steel that enter the United States of America, which will even more ensuring the steel industry in the United States,” he said, according to Reuters.
In addition, the US dollar Attracted the sellers after the very followed survey of the Purchasing Management Index (PMI) of Manufacturing of the Supply Management Institute (ISM) that indicated a third consecutive monthly fall in production. The index dropped to 48.5 in May from 48.7 in April. This figure was weaker than the expectation of 49.5.
The European Union (EU) expressed “strong” regrets by Trump’s plan to double US tariffs on steel and aluminum, which could derail bilateral commercial negotiations. The European Commission (CE) said on Saturday that Trump’s tariff decision “undermines ongoing efforts” to reach an agreement, warning about “countermeasures,” according to the BBC.
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.
