- The EUR/USD earns almost 50 pips on Wednesday, rising around half percent.
- The initial losses came from a new inflation shock after the January US CPI was high.
- The testimony of the president of the Fed, Powell, continues on his second day.
The EUR/USD regained ground on Wednesday, bouncing the initial losses to recover the 1,0400 zone while the markets shake a new lot of US inflation figures that in general accelerated in January. The US consumer price index (CPI) numbers exceeded forecasts in all areas, but markets are absorbing the blow quickly and moving to cooler headlines.
Read more: persistent inflation in the US reinforces the cautious message of the Fed
The president of the Federal Reserve (FED), Jerome Powell, said during his second day of testimony before the US government agencies that inflation remains a persistent issue, but that the US economy in general is in a solid base . Rate markets have postponed their bets of another rate cut by the Fed, with rates operators overwhelmingly waiting for the Fed to keep the rates without changes until December.
Live testimony of Jerome Powell: We have not arrived in inflation
Rumors circulate that Ukraine and Russia are approaching a peace agreement at the request of the US President Donald Trump. Both parties have fought to bring the ongoing conflict to an orderly resolution, and the “three -day invasion” by Russian President Vladimir Putin is only 12 days after his second anniversary. The euro is strengthening for the possible end of an ongoing military conflict so close to the borders of Europe.
EUR/USD price forecast
Never discard the euros of the euro until the fight has finished. The EUR/USD recovered the intimate losses and has pushed the offers back to the green on Wednesday, sending the pair back over the 1,0400 zone. The EUR/USD remains hindered by the 50 -day exponential mobile average (EMA) about 1,0430, but a technical floor is set near the 1,0300 region.
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/AUD (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.
