- The EUR/USD remained stable on Wednesday, about 1,1200.
- Germany’s final inflation figures for April did not impress anyone, as expected.
- The US IPP inflation is just around the corner on Thursday.
The EUR/USD cut the impulse drastically on Wednesday, staying in a flat containment pattern near the 1200 zone despite an early increase in offers. European economic data has been largely irrelevant this week, as usual. However, a double blow of the United States inflation data (USA) has given many operators something to think about.
The Harmonized Consumer Price Index (HICP) of Germany for April came exactly as expected on Wednesday, and the US side data were strictly medium -level, giving markets a respite between the inflation data of the consumer price index (CPI) this week published on Tuesday and the next inflation figures of the Production Price Index (IPP) on Thursday.
It is anticipated that IPP underlying inflation decreases to 3.1% year -on -year, lowering 3.3%. While the decrease in inflationary pressures is positive, markets are increasingly concerned about the effects of tariffs, which are expected to begin to influence general economic data from May.
EUR/USD price forecast
Until now, the markets have failed to boost the EUR/USD above the 1,1200 zone this week, staying just below the key technical level. However, despite the limited bullish potential, the pair remains above the 50 -day exponential mobile average (EMA) about 1,1070. The bullish impulse is still absent in daily candles, but technical oscillators are drastically retreating from overall territory, hinting at the potential for an upward extension.
EUR/USD daily graphics
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.
