- EUR/USD goes back from the maximum of 1,1830 while the US Fiscal Law is approved in the Senate and the yields of the bouncing treasure.
- Jolts and ISM data support the FED waiting position; Powell does not commit to a cut in July.
- Of the ECB Guindos warns that the EUR/USD above 1.2000 would be “complicated”; The block data is still mixed.
The EUR/USD was practically unchanged on Tuesday during the US session after reaching a maximum of several years of 1,1830, before falling below the level of 1,1800. The approval of the “One Big Beautiful Bill” by the president of the US, Donald Trump, and the increase in US treasure yields.
Recently, the US Senate approved Trump’s fiscal bill by a 51-50 vote, with vice president JD Vance casting the decisive vote. Now the Tax and Expenses Law of 3.3 billion dollars goes to the US House of Representatives, which is ready to approve the fiscal package, which “includes the entire legislative agenda of the president in a single package,” according to Bloomberg.
Meanwhile, the data suggests that the current moderate position of the Federal Reserve is justified by the US state of the US economy. The last survey of employment and labor rotation (Jolts) of May revealed that the labor market remains solid, with more vacancies than initially predicted. At the same time, the manufacturing PMI of the Supply Management Institute (ISM) improved, but remained in contraction territory during the last four months.
Meanwhile, the central bankers in Portugal are monopolizing the headlines. The president of the Fed, Jerome Powell, adhered to the script to wait and see if the tariffs are prone to inflation, while mentioning that he cannot say if a cut in July is possible or not.
The officials of the European Central Bank (ECB) made comments indicating that inflation is decreasing and that the road of the rates is biased down. The Vice President of the ECB, Luis de Guindos, added that the parity of the EUR/USD above 1.2000 would be “complicated,” he said in an interview with Bloomberg. Other policy managers adopted a more neutral posture, favoring keeping rates unchanged.
On the other side of the Atlantic, the Harmonized Index of Consumer Price (HICP) of the Eurozone in June was aligned with the estimates and data of May. S&P global revealed that manufacturing activity in the block improved, but still contracted.
Daily movements of the euro in the market: the recovery of the Eur/USD stops while the US dollar is recovered
- The US dollar index (DXY), which tracks the value of the US dollar in front of a basket of six currencies, including the euro, rises 02% to 96.80.
- The last Jolts report showed that employment offers in the US increased to 7,769 million in May, the highest level since November, rising from 7,391 million and well above the expectations of 7.3 million.
- The ISM manufacturing PMI for June rose to 49.0 from 48.5 in May, exceeding the 48.8 forecast. Despite the improvement, the index remained in contraction territory for the fourth consecutive month.
- The president of the FED, Jerome Powell, commented that monetary policy remains “modestly restrictive” and refused to commit to a feat cut in July, stating that it is too early to say it, although it did not rule out. He added that, if not because of President Trump’s tariffs, the Fed would probably have reduced rates even more.
- The president of the ECB, Christine Lagarde, says that the mission is not yet fulfilled, but that they have already overcome that disinflation process. He added that there is a lot of uncertainty and that they must remain very vigilant about inflation and depend on the data.
- As for the data, the HCOB manufacturing PMI of the Eurozone in June was 49.5, rising from 49.4 in May and slightly above the forecast. As for inflation, HICP in June was 2% year -on -year, aligned with projections, while the underlying HICP remained at 2.3% year -on -year, without changes compared to the previous month.
- The news that the European Union (EU) would accept Trump’s universal tariffs promoted the EUR/USD up. However, the EU wants the US to reduce tariffs in key sectors, including pharmaceutical products, alcohol, semiconductors and commercial aircraft.
- It is projected that the crucial report of non -agricultural payrolls of the USA shows that the labor market is softening, with estimates that suggest that the economy added only 110,000 people to the workforce, below 139,000 last month. It is projected that the unemployment rate increases from 4.2% to 4.3%.
EURO TECHNICAL PERSPECTIVE: EUR/USD will consolidate around 1,1800 in the short term
The upward trend remains intact, but the Eur/USD torque seems to be prepared for a possible setback. The formation of a ‘DOJI’ after an increase of more than 3.29% suggests that there could be consolidation ahead. The relative force index (RSI) indicates that the bullish impulse is maintained.
If the EUR/USD exceeds 1,1800, the following resistance would be the annual peak of 1,1829, followed by 1,1850 and 1,1900. In case of additional weakness, if the torque falls below 1,1750, a fall to 1,1700 is expected. The key support is below the latter, in the minimum daily of June 26, 1,1653 and 1,1600.
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.
