- EUR/USD cuts the intradic rebound after Lagarde’s insinuations about the possible end of the flexibility cycle.
- The ECB reduces 2% rates as expected, but its statement suggests a cautious and dependent path in the future.
- Lagarde points out that politics is “well positioned” and suggests a possible pause in July; The market reacts with volatility.
- EUR/USD shoot at 1,1498 before softening; The weak unemployment data in the US keep the hopes of fees of the Fed before the NFP alive.
The EUR/USD maintains previous profits of more than 0.20% after the European Central Bank (ECB) monopolized the headlines, reducing the rates but leaving the door open for a pause at the next meeting on July 24. At the time of writing, the pair is negotiated at 1,1441 after bouncing from daily minimums of 1,1404.
The ECB decided to reduce 2%interest rates, as expected by market participants, although it has left the door open for a pause. The decision was not unanimous, with a dissident, most likely Robert Holzmann, who, in the prelude to the meeting, favored a cut after the June or July meeting.
In the statement, the ECB delineated its meeting by meeting and updated its growth and inflation projections. At the press conference of the BCE president, Christine Lagarde said that monetary policy is “well positioned” around the current uncertain perspective, adding that the Central Bank is close to finishing the flexibility cycle.
The EUR/USD shot up abruptly towards its maximum daily of 1,1498 before going back to the current levels of exchange rate.
On the other side of the Atlantic, the US Labor Statistics Office confirmed signs of a cooling in the labor market, since unemployment requests increased with more people requesting unemployment insurance. Meanwhile, the US trade deficit was reduced in April, according to the Office of Economic Analysis, since companies softened the accumulation of goods before the arrival of tariffs.
The speakers of the Federal Reserve (FED) monopolized the holders, led by Governor Adriana Kugler and the regional presidents of the Fed, Patrick Harker and Jeffrey Schmid. The dollar cut some of its previous losses, as the US dollar index (DXY) revealed. The DXY, which tracks the value of the dollar against six pairs, is practically unchanged at 98.75.
The eyes of Eur/USD operators are placed in the non -agricultural payroll figures of the United States, which is expected to decrease from 177K to 130K in May. It is projected that the unemployment rate remains unchanged by 4.2%.
Euro price this week
The lower table shows the percentage of euro change (EUR) compared to the main currencies this week. Euro was the strongest currency against the US dollar.
| USD | EUR | GBP | JPY | CAD | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.82% | -0.85% | -0.16% | -0.56% | -1.16% | -1.28% | -0.34% | |
| EUR | 0.82% | -0.04% | 0.67% | 0.26% | -0.35% | -0.50% | 0.47% | |
| GBP | 0.85% | 0.04% | 0.74% | 0.29% | -0.30% | -0.46% | 0.52% | |
| JPY | 0.16% | -0.67% | -0.74% | -0.40% | -1.00% | -1.14% | -0.27% | |
| CAD | 0.56% | -0.26% | -0.29% | 0.40% | -0.58% | -0.75% | 0.22% | |
| Aud | 1.16% | 0.35% | 0.30% | 1.00% | 0.58% | -0.09% | 0.90% | |
| NZD | 1.28% | 0.50% | 0.46% | 1.14% | 0.75% | 0.09% | 0.98% | |
| CHF | 0.34% | -0.47% | -0.52% | 0.27% | -0.22% | -0.90% | -0.98% |
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).
Daily summary of market movements: EUR/USD Cut out profits while Fed officials become cautious before US employment data.
- The EUR/USD bullish trend remains intact, but it would be premature to assume that it will continue like this, given the uncertainty about US economic data publications and the Eurozone.
- Initial unemployment applications for the week that ended on May 31 increased by 247K, above 235K estimates and compared to the 240K of the previous week. The data, reinforced by the ADP employment change report for May, could be a prelude to a negative report of non -agricultural payrolls.
- The US trade balance revealed that the deficit was drastically reduced in May, contracting 55.5% to 61.6 billion dollars, the lowest level since September 2023.
- Kugler said that monetary policy is well positioned for any change in the macroeconomic environment, adding that it is already seeing the effects of the highest tariffs and expects inflation to increase during 2025.
- The president of the Fed of Philadelphia, Patrick Harker, said that in the midst of uncertainty, the Fed must wait and see what will be the next policy steps. He said that Fed could face an increase in inflation and unemployment at the same time. A slow disinflation justified that the Central Bank kept the stable rates.
- Kansas City Fed president Jeffrey Schmid commented that he is focused on maintaining the credibility of the Fed in relation to inflation and expects tariffs to be reflected in prices in the coming months.
- ECB officials, according to Bloomberg, expect rates reductions to break at the July meeting. “Some officials see that reductions in indebted costs could already be completed, while others still support another movement, probably in September, according to sources.”
- Financial market participants do not expect the ECB to reduce their deposit installation rate at 25 basic points (PBS) at the July monetary policy meeting.
EURO TECHNICAL PERSPECTIVE: EUR/USD recovers 1,1400 but stops below 1,1440
The EUR/USD bullish trend remains intact, but buyers seem reluctant to push prices to achieve a daily closure above 1,1450. The impulse seems to be fading, as indicated by the price action and the relative force index (RSI). The slope of the RSI is flattening, indicating that the bulls are taking a break.
For an upward continuation, the EUR/USD torque must close above 1,1454 at a daily level. If it is exceeded, the torque could challenge the peak of the current week of 1,1494, followed by 1,1500 and the maximum of April about 1,1572, before 1.16.
On the contrary, if the EUR/USD falls below the minimum daily of June 2, 1,1344, a movement towards 1.13 is in the letters. A rupture of this last one would expose the simple mobile average (SMA) of 20 days in 1,1284, followed by the 50 -day SMA in 1,1218 and 1,1200.
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.
