- The EUR/USD operates cautiously since the US president has imposed 30% tariffs on EU imports.
- The EU von der Leyen warns of proportional countermeasures to safeguard the interests of the block.
- This week, US CPI data for June will be the key trigger for the US dollar.
The EUR/USD pair operates around 1,1670 during the Monday Asian trading session. The main currency pair faces selling pressure since the euro (EUR) yields slightly less than its peers, after the imposition of 30% tariffs by the president of the United States (USA) Donald Trump to imports of the European Union (EU), which will enter into force as of August 1.
Together with the EU, Mexico has also received a US letter, specifying 30%tariffs, together with the threat of increasing them if the nation retaliates or considers countermeasures.
Meanwhile, the EU president, Ursula von der Leyen He has declared that His team continues to negotiate commercial terms with Washington and has expressed confidence that the 27 -nations block will reach an agreement before the deadline of August 1. However, he has warned that the commercial block could announce proportional countermeasures, if necessary, to safeguard their interests.
In the US, investors expect the consumer price index (CPI) data for June, which will be published on Tuesday. Inflation data will significantly influence market expectations on the monetary policy of the Federal Reserve (FED). Economists expect inflationary pressures in the US to have grown at a faster rate in June.
The EUR/USD corrects near the ascending trend line drawn from the minimum of February 25, 1,0360, drawn in a daily frame. The 20 -day exponential mobile average (EMA) continues to provide a support of around 1,1660.
The 14-day relative force index (RSI) slides to the range of 40.00-60.00, suggesting that the bullish impulse has faded. However, the bullish inclination remains intact.
From now on, the torque could enter a bassist trajectory and slide towards the minimum of June 23, 1,1454 and the round level support of 1,1400, if it breaks below the minimum of June 24, 1,1573.
On the other hand, an upward movement of the torque above the maximum of July 1, 1,1830 will open the door to the round level of 1,1900, followed by the psychological resistance of 1.2000.
EUR/USD daily graphics
EURO – FREQUENT QUESTIONS
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.
