- The EUR/USD explored the end under once again on Thursday, testing 1,1200.
- The dollar market flows are on the high side after a pending advertisement between the US and the United Kingdom.
- The announcement of the commercial agreement has not yet been made official, but investors expect more setbacks in tariffs.
The EUR/USD was cut at the end under Thursday, losing a little more than two thirds of one percent from the opening offers of the day after the US dollar offers (USD) received a boost in the general market after the tentative announcement of a pending commercial agreement between the United States (USA) and the United Kingdom (UK). Europe still seems to disagree with the Trump administration, with White House officials, warning the Paneuropeo continent that “does not retaliate” against taxes to US imports.
The commercial agreement between the US and the United Kingdom would allow the United Kingdom to evade high “reciprocal” tariffs that will be reinstated on July 9, after President Trump temporarily postponed his own tariffs of the ‘Day of Liberation’. However, a 10% general tariff is planned for all imports from the United Kingdom to the US, which could affect the feeling of the market soon. The Trump administration has completely suspended tariffs on significant imports such as refined ethanol. The data indicates that the US has not imported refined ethanol from the United Kingdom in at least 15 years.
EUR/USD price forecast
The EUR/USD has found an interim fund just above the 1,1200 area, but the price action continues to fight for firm support in the 1,1300 region. The pair has retreated from maximum of several months registered just north of 1,1500, but the downward impulse is still limited while the euro operators expect key developments in the market before pressing too much in any direction.
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.
