- EUR/USD backed a maximum of two months of 1,1495, reached on Thursday.
- The initial weekly applications of unemployment subsidy in the US rose to 247,000, above the expected 235,000.
- The European Central Bank made a reduction of rates of 25 basic points, widely expected, on Thursday.
EUR/USD continues to lose ground after retreating a maximum of two months of 1,1495, marked on June 5, currently quoting around 1,1440 during Friday’s Asian hours. The operators adopt caution before the next non -agricultural payrolls of the US, which is expected to have added 130,000 jobs in May, below the increase of 177,000 in April. The unemployment rate is also expected to remain stable at 4.2%.
The US Department of Labor published the initial weekly applications of unemployment subsidy, which rose to 247,000, above the expected 235,000. On Thursday, employment in the US private sector according to ADP increased by 37,000 in May, compared to an increase of 60,000 (reviewed of 62,000) registered in April, well below the market expectation of 115,000.
The president of the United States, Donald Trump, had a phone call with the Chinese president, Xi Jinping. Trump said the call was productive and that he was prepared to continue the negotiations on tariffs. However, Trump and his team fought to stay compounds with Chinese commercial officials. Last week, Trump accused China of raping a truce on tariffs after an agreement between Washington and Beijing to temporarily reduce reciprocal tariffs at a meeting in Geneva.
On Thursday, the European Central Bank (ECB) made a reduction of rates of 25 basic points, as expected, and reduced the 2.0% interest rates from 2.25%. The ECB delineated, in its accompanying statement, its meeting approach for meeting for the future and updated its growth and inflation projections. In addition, the president of the ECB, Christine Lagarde, said at a press conference after the meeting that monetary policy is “well positioned”, while the current uncertain perspective is more than usual. Lagarde also added that the Central Bank is close to finishing the flexibility cycle.
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.
