- EUR/USD turns around 1.1350 while investors are looking for fresh clues to trade relations between the US and China.
- The ECB is expected to cut interest rates at the June meeting.
- The ECB knot sees the demands of shocks and disinflation due to Trump's tariffs in the near term.
EUR/USD trading on a tight range around 1.1350 at the start of the week. The main currency pair combined the ambiguity in trade discussions between the United States (US) and China. Adverse statements from Washington and Beijing if US president Donald Trump and Chinese president Xi Jinping spoke to trade terms forced investors to stay on the sides.
President Trump said trade discussions between Washington and Beijing are well. However, China has denied these statements, stating that there is no “economic and trade negotiation between China and the US”. On Friday, a spokesman from the China embassy said, “China and the US do not have any consultation or negotiations with tariffs,” Reuters reported.
After comments from Beijing, Trump said in an interview with the time magazine that China's Xi Jinping called him. “He called,” Trump said, and added, “I don't think the sign of weakness in his name.” Trump also clarified the last Friday that Xi has called many times since he revealed his tariff plan. “I don't want to comment about it, but I've spoken many times,” Trump told journalists, Reuters reported.
Meanwhile, the US Treasury Scott Bestent has also not confirmed any trade communication between US and China presidents. “I don't know if President Trump talked to President Xi,” Bessent said, ABC reported.
During European trading hours on Monday, the US dollar (USD) was rising higher, clinging to last week's recovery relocation, driven by the hope of leaving the tariff war between the two largest powerhouses in the world. This week, the main increment for US dollars is a murder of US -economic data, including nonfarm payrolls (NFP) on Friday.
Daily Digest Market Movers: The EUR/USD Trades Sideways Leading Busy Eurozone Data Week
- EUR/USD trading is working with Euro (EUR) carefully ahead of Flash Harmonized Index of Consumer Prices (HICP) data of April and Q1 Gross Domestic Product (GDP) from Eurozone and major countries, which will be published this week. Inflation and economic growth data will significantly influence market expectations for European Central (ECB) policy policy policy.
- According to market expectations, the Eurozone Headline HICP will return to the ECB target of 2%, the slowest growth in price pressure from October 2024. In March, inflation data increased by 2.2%. Eurozone GDP growth is estimated to grow at a steady speed of 0.2% QOQ in the first quarter. Moderate inflation growth will increase the confidence of entrepreneurs that the ECB will reduce interest rates at the June policy meeting.
- Meanwhile, Reuters reported on Saturday that ECB policies are increasingly confident in cutting interest rates in June as inflation continues to collapse. However, there is no appetite in a large move. However, the report did not highlight the names of ECB officials who guided the chances of further expanding the financial policy.
- The ECB and Dutch Central Bank Governor Klaas Knot policymaker stated in an interview with the Dutch Financial Daily FD over the weekend that June financial policy would be more “complicated” as long -term inflation risks to “both sides”. The knot signed the Knot that US tariff policy could lead to a decline in demand and disinflation in the near term. “In the short term, it is clear that 100% of the demand shock will dominate, so inflation will decrease,” Kin said.
- In the global facade, the uncertainty in trading relations between the US and Eurozone has also kept the euro on the sides. The European Union (EU) Economic Commissioner for Trade Valdis Dombrovskis has expressed concerns over the US dealing with the near term, while talking to journalists on the sides of the International Monetary Fund (IMF) meetings in Washington, reported by Reuters. “Many jobs are early to get to more concrete parameters and elements and areas of cooperation that will allow us to avoid the implementation of tariffs,” Dombrovskis said.
Technical Analysis: EUR/USD wobbles around 1.1350
EUR/USD trading is back and forth around 1.1350 in the European session on Monday. The outlook of the main currency pair remains bullish because the 20-week exponential transfer of average (EMA) is higher around 1.0885.
The 14-week relative Index Index (RSI) climbed to close 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 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.
