- The EUR/USD recovers profits despite the weak Employment Report of ADP before the NFP report.
- The US ADP data shows the first fall in private payroll in two years, pressing the US dollar.
- ECB officials remain cautious while unemployment in the euro zone increases unexpectedly.
The euro (EUR) records minimum losses of 0.08% against the US dollar (USD), quoting below the 1,1800 figure on Wednesday. An US employment report worse than expected increased the speculation that the Federal Reserve (FED) could cut interest rates in the midst of increasing fears of recession in the world’s largest economy. At this time, the EUR/USD pair is quoted at 1,1795, practically unchanged.
On Wednesday, Automatic Data Processing (ADP) announced that private payrolls decreased in June, marking the first fall in two years. Although the US dollar initially weakened, it recovered some land, dragging the EUR/USD again below 1,1800 while the operators prepare for the publication of the latest employment figures.
Non -agricultural payrolls (NFP) are expected to be 110K, below May 139k. The unemployment rate is expected to be 4.3%, an increase with respect to 4.2%, but well below 4.4%projected by the Federal Reserve by the end of the year.
An EE.UU.U. Employment Report could increase the probabilities of greater relief by the Fed. Recently, Richmond’s president of the Fed, Thomas Barkin, declared that there is no urgency to change the policy at this time, pointing out that a significant amount of incoming data is expected before the July meeting.
In the euro zone, the last report of the unemployment rate increased from 6.2% to 6.3% in May, exceeding estimates aligned with the previous reading.
Meanwhile, those responsible for policies of the European Central Bank (ECB) made holders. Mario Centeno said that the Central Bank remains cautious about the trajectory of the rates, while Olli Rehn added that they must be aware of the risk that inflation is persistently maintained below the objective of 2%. Pierre Wunsch said he does not feel uncomfortable with market rates expectations.
What moves the market today: the progress of the EUR/USD stops before non -agricultural payrolls
- Dollar recovery limits the progress of the EUR/USD. The American dollar index (DXY), which tracks the progress of the dollar against a basket of six currencies, rises 0.13% to 96.78.
- The ADP employment change report revealed that employment in the US private sector fell in 33K put in June, a strong fall compared to the expectations of a 95K increase. The decrease was mainly driven by the service industries, which eliminated 66k positions, mainly due to a setback in professional and business services.
- The approval of the “One Big Beautiful Bill” of the US president, Donald Trump, is in doubt since the Chamber Republicans are considering modifications to the bill, which Trump wants to be signed for July 4.
- Commercial news revealed that Trump announced a commercial agreement with Vietnam, under which US products could be exported with 0%tariffs. In contrast, USA imposed a 20% tariff on Vietnam products and 40% to transfers.
- The president of the Fed, Jerome Powell, commented that monetary policy remains “moderately 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 EU Commission of Commerce, Sefcovic, will visit China in August, said SCMP, citing Fuentes. Chinese investment in Europe is considered a potential area for discussion. In this, the SCMP article mentions electric vehicles and battery plants.
EURO TECHNICAL PERSPECTIVE: EUR/USD will consolidate about 1,1800 in the short term
The EUR/USD still has a bullish bias, after reaching a minimum of two days of 1,1746. In spite of this, the impulse remains bullish, as the relative force index (RSI) shows. That said, if the PAR exceeds 1,1800, look for a proof of the annual maximum of 1,1829. If it is exceeded, the following key resistance zone would be 1,1850 and 1,1900.
On the other hand, if the EUR/USD falls below 1,1750, you can expect a greater decrease towards 1,1700. The key support is below the latter, in the minimum daily of June 26, 1,1653 and 1,1600.
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.
