- The EUR/USD faces minimal pressure above 1.1400 as US dollars, along with investors looking for clarity in the US-China trade perspective.
- The US Treasury Secretary has put responsibility for the development of US-China trade in Beijing.
- ECB officials support the need for more interest rate cuts.
EUR/USD edges are less than 1.1400 at European trading time on Tuesday. The main currency pairs are as low as the US dollars (USD), but remain as wide as the side of the increasing uncertainty about the trade view between the United States (US) and China. The US Dollar Index (DXY), which monitors the value of the greenback against six major currencies, ticks up to close to 99.20 but trading within the trading range on Monday.
Comments from US Secretary of Treasury Scott Bessent that China should start trading talks in the US have increased investors' doubts about whether trade discussions are being conducted. “I believe that it is up to China to escalate, because they sell five times more of us than we sell them to themBessent said in an interview at the CNBC squawk box on Monday.
Meanwhile.
Donald Trump insists that China's Xi has called him several times to discuss bilateral trade since the imposition of higher tariffs in Beijing. However, the Ministry of the Chinese external has continued to deny any economic and trade discussions between Trump and XI.
In addition to comments from the White House in US-China trade talks, a murder of US economic data will influence the action on the US dollar this week. Investors will pay attention to the initial Q1 Gross Domestic Product (GDP), ISM Purchasing Managers 'Index (PMI), ADP Employment Change and Nonfarm Payrolls (NFP) data for April, and personal consumption prices (PCE) data for March, which influences the FED's (FED)' (FED) expectations.
In Tuesday's American session, investors will focus on US Jolts' job opening data for March, which is expected to show that employers have posted 7.5 million work offers, less than 7.56 million seen in February.
Daily Digest Market Movers: EUR/USD drops as Euro is cautious with caution
- A gentle collapse in the EUR/USD pair is also driven by a slight sale pressure on the Euro (EUR), along with European Central Bank (ECB) officials expressing the need for more interest rates. On Monday, ECB and Finnish central bank policymaker supported the need for further expansion of financial policy and expressed concerns about deepening the risk of eurozone inflation stressing the central bank's target of 2% in front of Trump's tariffs
- Rehn did not determine the possibility of interest rates slipping under a neutral rate. “We should study all options with an open mind and not a priori rule out rate cut below the neutral rate, ” Rehn said in an event, Reuters reported.
- Separately, ECB official and Bank of France governor François Villeroy de Galhau also emphasized the need for more interest rates amid fear that Trump's tariff policy could lead to an economic slowing down. “We still have a room to lower interest rates,” Villeroy de Galhau said after expression of confidence that inflation will return to 2% target In a radio interview on Monday, Reuters reported.
- For more clues to the ECB financial policy perspective, investors looked at Eurozone's Flash Q1 GDP and the Harmonized Index of Consumer Prices (HICP) data for April, which will be released on Wednesday and Friday, respectively.
- Meanwhile, Spain's GDP data for the January-March period has become weaker than expected. The economy rose 0.6% in the first quarter, missing expectations of 0.7% and the previous release of 0.8%. Spain HICP data increased steady by 2.2% years-on year in April. Last month, inflation data rose at a moderate speed of 0.6%, compared to the 0.7% growth visible in March.
Technical Analysis: The EUR/USD slips to close to 1.1400
EUR/USD trading is less around 1.1400 in the European session on Tuesday. The outlook of the main currency pair remains bullish because the 20-week exponential transfer of average (EMA) is higher around 1.0890.
The 14-week relative Index Index (RSI) climbed to levels of doubt above 70.00 on the weekly chart, indicating a strong momentum, but the chances of some correction could not be decided.
Looking, the psychological level of 1.1500 will be the main resistance for the pair. By contrast, July 2023 high of 1.1276 will be a major support for Euro Bulls.
Euro faqs
Euro is the money for 19 European Union countries belonging to the eurozone. This is the second most seriously exchanged money in the world behind the US dollar. In 2022, it costs 31% of all foreign exchange transactions, with an average sun -shift of more than $ 2.2 trillion a day. EUR/USD is the most heavy -exchanged pair of currency in the world, providing approximately 30%off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the Reserve Bank for Eurozone. The ECB sets interest rates and is in charge of financial policy. The main command of the ECB is to maintain price stability, which means control of inflation or stimulation of growth. Its main tool is to increase or decrease interest rates. The relatively high interest rate – or the hope of a higher rate – usually benefits the euro and vice versa. The ECB Governing Council is making financial policy decisions at meetings held eight times a year. The decisions were made by the leaders of Eurozone National Banks and six permanent members, including ECB president Christine Lagarde.
Eurozone inflation data, which is measured by the coexistence index of consumer prices (HICP), is an essential euphoric for the euro. If inflation rises more than expected, especially if above the target of 2% of the ECB, it forces the ECB to raise interest rates to restore it under control. The relatively high interest rate compared to its counterparts can usually benefit the euro, as it makes the region more attractive as a place for global investors to park their money.
Data has released economic health and may affect the euro. Indicators such as GDP, manufacturing and service PMIS, work, and consumer sentiment surveys can influence the direction of single money. A strong economy is good for the euro. Not only does it attract more foreign investments but it can encourage the ECB to put interest rates, which directly strengthens the euro. Otherwise, if economic data is weak, the euro is likely to fall. Economic data for the four largest economies in the Euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the eurozone economy.
Another significant release of data for the euro is the trade balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports at a given period. If a country produces highly sought exports then its money gets value from excessive demand created from foreign buyers who seek to buy these goods. Therefore, a positive balance on the net trade strengthens a money and vice versa for a negative balance.
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