- EUR/USD remains stable while the US dollar clings after stronger work data.
- The US Treasury Secretary, Scott Besent, is scheduled to meet with Chinese officials on Monday.
- The head of the ECB monetary policy, Yannis Stournaras, warned that the uncertainty related to possible US tariffs could interrupt growth in the eurozone.
EUR/USD remains stable after registering losses in the previous session, quoting around 1,1400 during Monday’s Asian hours. The PAR faced challenges since the US dollar (USD) received support from the stronger labor data than expected in the US of Friday for May, which increased the chances of the Federal Reserve (FED) maintaining its reference interest rate without changes in its upcoming two monetary policy meetings.
The US Labor Statistics Office (BLS) revealed that US non -agricultural payroll (NFP) increased by 139,000 in May, compared to the increase of 147,000 (reviewed since 177,000) in April. This reading exceeded the market consensus of 130,000. In addition, the unemployment rate remained stable at 4.2%, and the average profit per hour remained unchanged at 3.9%, both readings were stronger than expected by the market.
Traders will probably monitor commercial conversations between the US and China scheduled in London on Monday. The US Treasury Secretary, Scott Besent, and two other Trump administration officials are ready to argue with their Chinese counterparts after both countries have discussed numerous issues in the midst of a commercial war in escalation.
The monetary policy of the ECB, Yannis Stournaras, declared that the Eurozone has achieved a soft landing and emphasized that the relief of politics is almost finished. However, Stournaras warned that the uncertainty related to possible US tariffs could interrupt growth, according to Bloomberg.
The president of the ECB, Lagarde, also said that the Central Bank is close to finishing the relief cycle. Monetary policy is “well positioned”, while the current uncertain perspective is more than usual, added Lagarde.
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.
