- The EUR/USD struggles to find firm support about 1,0800 while the USD index clings to profits about a maximum of three weeks of 104.40.
- Investors expect the US PCE inflation data on Friday to obtain new orientations on interest rates.
- ECB Villeroy supports a new decrease in key interest rates.
The EUR/USD strives to gain ground after a five -day loss streak about 1,0800 during Wednesday’s European negotiation hours. However, the perspectives of the main currency pair are uncertain since the US dollar (USD) clings to recent profits, with the US dollar index (DXY) maintaining about a maximum of almost three weeks in 104.40, in the midst of expectations that the less disruptive tariff agenda of the president of the US US ECONOMICS
On Monday, President Trump said at the White House that all imminent tariffs will not be imposed since he could give “many countries” exemptions in tariffs. It seems that several leaders of US business partners have managed to negotiate agreements with Trump. Although it is widely anticipated that a commercial war led by Trump will result in a global economic slowdown, a war with less nations will limit the scope of economic agitation.
Even so, consumers’ confidence in the US is decreasing since Trump tariffs will lead to a significant decrease in household power. On Tuesday, the Board Conference reported a strong drop in consumer confidence data for March, an indicator of feeling that anticipates consumer behavior. The feeling data stood at 92.9, significantly below the 100.1 seen in February.
Looking ahead, the main trigger for the US dollar will be the US Personal Consumption Expenditure Index (PCE) for February, which will be published on Friday. Economists expect the underlying inflation of the US PCE, which is the preferred inflation indicator of the Federal Reserve (Fed), has grown at a faster rate of 2.7% year -on -year, compared to the increase of 2.6% seen in January.
At the policy meeting last week, the Fed reviewed its prognosis for the Personal Consumption Expenditure Index (PCE) for this year to 2.8%, from 2.5% projected at the December meeting.
What moves the market today: the EUR/USD operates with caution in the midst of firm expectations of ECB
- The EUR/USD operates with caution since the prospects for the euro (EUR) are uncertain in the midst of growing expectations that the European Central Bank (ECB) will cut interest rates again. The eurozone economy is expected to face significant economic risks after the imposition of reciprocal tariffs by President Trump.
- Trump has pointed out on numerous occasions that he will impose tariffs on the eurozone for not buying enough US assets. Such scenario will be negative for the old continent. Historically, economies tend to strengthen their internal economy by reducing interest rates when external conditions are not favorable.
- The German economy has already shown its support to strengthen the economy by injecting more euros in circulation. Last week, German leaders voted to expand the indebtedness limit to increase defense expenditure and the creation of an infrastructure fund worth 500 billion euros.
- The president of the ECB, Christine Lagarde, has also decreased the fears of persistent inflation pressures due to a possible commercial war between the US and the Eurozone. Lagarde said last week that the inflationary impact of the commercial war is temporary since the effect “will soften in the medium term” due to “a lower economic activity that will cushion inflationary pressures.”
- On Tuesday, the Governing Council member of the ECB and governor of the Bank of France, François Villeroy de Galhau, said there is still room to “reduce interest rates even more”, and the 2.5% deposit rate could “go down to 2% by the end of summer.”
Technical analysis: EUR/USD falls below 1,0800
The EUR/USD extended its correction from the maximum of five months of 1,0955 to near the exponential (EMA) mobile average of 20 days, which is negotiated around 1,0760. However, the long -term perspective of the main currency pair remains a bullish since it is maintained above the 200 -day EMA, which oscillates around 1,0667.
The 14 -day relative force index (RSI) cools below 60.00, suggesting that the bullish impulse is over, but the upward inclination remains intact.
Looking down, the maximum of December 6, 1,0630 will act as the main support zone for the torque. On the contrary, the psychological level of 1.1000 will be the key barrier to the euros of the euro.
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.
