- EUR / USD again explored the low -end Thursday, testing the 1,1200.
- The green market flows are raised after an American transaction announcement awaiting US-UK.
- The announcement of the trade agreement has not yet been official, but investors hope for other tariff walkbacks.
The EUR / USD cut at the bottom of the range on Thursday, losing a little more than two thirds of 1% compared to the opening offers of the day after the offers of the US dollar (USD) attracted a wide market increase following the provisional announcement of an outstanding trade agreement between the United States (United States) and the United Kingdom (United Kingdom). Europe always seems to be on outings with the Trump administration, the White House officials continuing to warn the Pan-EU continent to “do not retaliate” against American import taxes.
The US-UK trade agreement would allow the United Kingdom to escape the high “reciprocal” prices which should reintegrate on July 9, after President Trump temporarily postponed his own “Liberation Day” tariffs. However, a wide price of 10% remains planned for all imports of the United Kingdom in the United States, which can soon reduce the feeling of the market. The Trump administration has fully suspended prices on important imports such as refined ethanol. The data indicates that the United States has not imported refined ethanol from the United Kingdom for at least 15 years.
EUR / USD price forecast
The EUR / USD has found a provisional background just above the 1.1200 handle, but the action of prices continues to fight to take a firm foot in the 1.1300 region. Fiber was unleashed from the multi-house summits displayed just north of 1,1500, but the dynamics remain limited because the merchants in euros await key market developments before pushing too hard in both directions.
EUR / USD daily graphics
FAQ Euro
The euro is the currency of the 19 countries of the European Union which belong to the euro zone. It is the second most exchanged currency in the world behind the US dollar. In 2022, he represented 31% of all exchange transactions, with an average daily turnover of more than 2.2 billions of dollars per day. The EUR / USD is the most negotiated currency pair in the world, representing around 30%reduction on 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 of the euro zone. 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 increase or decrease in interest rates. Relatively high interest rates – or higher rate waiting – will generally benefit the euro and vice versa. The ECB board of directors makes monetary policy decisions during meetings held eight times a year. The decisions are made by the chiefs of national banks in the euro zone and six permanent members, including the president of the ECB, Christine Lagarde.
Inflation data from the euro zone, measured by the harmonized consumer prices index (HICP), is an important econometric for the euro. If inflation increases more than expected, especially if the 2% objective of the ECB forces the ECB to increase interest rates to bring it closer. Relatively high interest rates compared to its counterparts will generally benefit the euro, as it makes the region more attractive as a place for global investors to park their money.
Data versions assess the health of the economy and can have an impact on the euro. Indicators such as GDP, manufacturing and PMI services, employment and surveys on consumer feelings can all influence the management of the single currency. A strong economy is good for the euro. Not only does it attract more foreign investments, but it can encourage the ECB to establish interest rates, which will directly strengthen the euro. Otherwise, if the economic data is low, the euro is likely to drop. Economic data for the four largest economies in the euro zone (Germany, France, Italy and Spain) are particularly important, because they represent 75% of the economy in the euro zone.
Another significant data press release for the euro is the trade balance. This indicator measures the difference between what a country gains from its exports and what it spends in imports over a given period. If a country produces highly sought -after exports, its currency will gain in value only from the additional demand created from foreign buyers seeking to buy these goods. Consequently, a positive net trade balance reinforces a currency and vice versa for a negative balance.
