- EUR/USD was lower on Monday because the potential trading stress had weighted sentiment in the market.
- President Donald Trump has announced plans to start a 100% tariff in foreign -made films, which increases concerns over the rising protectionist policies.
- The eurozone harmonized index of consumer prices remained stable at 2.2% yoy in April, slightly more than expected 2.1%.
EUR/USD kicks on Sunday on a weaker note, trading near 1.1320 during the Asian session on Monday. U.S. President Donald Trump confirmed that he did not seek to remove the Federal Reserve (FED) seat Jerome Powell before his term in May 2026. As Trump criticized Powell, he called “a total tough,” he again said that interest rates should be lowered.
In addition, the EUR/USD pair faces headwinds possibly from potential trade tensions. Trump announced plans to direct the US Representative and Commerce Department to start the process of imposing a 100% tariff in foreign films.
In the face of data, the US Nonfarm Payrolls (NFP) report showed a stronger increase of 177,000 jobs in April, following a modified 185,000 increase in March. It defeated a market forecast of 130,000. The unemployment rate remained stable at 4.2%, while the average hourly income held at 3.8% year-on-year. Later during the day, entrepreneurs will be on guard for the US ISM services PMI for further direction.
The Euro found some support on Friday after a stronger than the expected eurozone inflation numbers. The harmonized index of consumer prices lasts stable at 2.2% year-year in April, slightly more than a forecast of 2.1%. Inflation services accelerated by 3.9%, and the main inflation (excluding food and energy) rose to 2.7%, both above expectations. These readings have reinforced market expectations for an integrated 60 points basis (BPS) in the European Central Bank (ECB) rate of reduction by the end of the year.
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 services 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.
