- EUR/USD weakened slightly on Wednesday, going back below 1,0900.
- EU data is still functionally not shocking while US data weigh.
- The US IPC inflation was moderated more than expected in February, generating hope for IPP figures.
The EUR/USD bidders loosen the accelerator on Wednesday, allowing the Fiber to go back around a third of one percent and pushing offers again below the 1,0900 area. Despite a significant recovery in the EUR/USD during the last weeks, buyers are settling again after resetting the Fiber in more than 5% in less than two weeks.
European economic data is barely registering impact this week, since concerns on the commercial war and US inflation data dominate the situation. On Wednesday, the US implemented a 25% world tariff over all imports of steel and aluminum, marking a significant escalation in the objective of President Donald Trump to simultaneously initiate a commercial war with all the allies of the nation.
In February, US consumer price index (CPI) fell more abruptly than expected, with a general CPI of 0.2% month to month and from 2.8% year -on -year, slightly faster than expected. While this is still above the 2% target of the Federal Reserve (Fed), it has raised the hopes of adjustments in the fees. The CME Fedwatch tool now indicates better probabilities of a Fed feat cut in June, instead of July.
Almost four years have passed since the general inflation of the United States reached “transient” levels. Apart from a brief deceleration in the third quarter of 2024, the key inflation indicators have remained stable since June 2023, when the post-covid inflation rate was moderated to 3% per year.
In spite of the coldest readings of the CPI In February, there are signs of possible challenges for those responsible for policies: the prices of gasoline and fuel oil fell 3.1%and 5.1%, but natural gas prices increased by 6%. In addition, housing prices inflation rose 4.2% year -on -year, while a small 0.3% decrease in vehicle prices concealed a 2.6% increase in food prices inflation compared to last year.
EUR/USD price forecast
The EUR/USD seems to be ready to finish its recent bullish streak, closing down and backing below 1,0900 as fast as it jumped over the main area in the first place. However, the Fiber has risen almost 7.6% since the last important minimum about 1,0175, with the bulls easily exceeding the 200 -day exponential mobile average (EMA) in the process.
The EUR/USD now faces a technical resistance in the 1,0900 zone, a technical region that baffled the uprisers of the euro the last time it happened, in October and November last year.
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.
