- EUR/USD drifts on Thursday near Asian early sessions to 1.1335.
- The early stages of Trump's tariffs are trying to bear increasing costs for consumers, Fed Beige's book said.
- EKPi Muller said prices could fall neutral in trade.
EUR/USD pair The edges are about 1,1335 higher on Thursday during the early session of Asia. Relief on the dangers of potential tariffs in US President Donald Trump exerts a certain pressure on the US dollar (USD).
According to the Federal Reserve (Fed) beige report, companies engaged in the early stages of Trump tariffs are looking for opportunities to transfer increasing costs to consumers. Companies announced that they would receive notifications of increased prices from suppliers, and they found ways not to acquire an increase while noting their ability to transmit their ability to convey to their customers.
At the beginning of the month, Trump imposed 10% or more imports for dozens of countries by 10%, but then unexpectedly suspended taxes within 90 days to have lower interest rates negotiations. However, uncertainty about trade policy and US economy slowing can drag the green area and create a backwind EUR/USDTo.
Over the pond, European Central Bank (ECB) Cut its main interest rate by a quarter percentage point at 2.25% at last week's April meeting. During the press conference outlook For the European economy.
In the meantime, Madis Muller, a member of the Council of the ECB, said on Wednesday that the central bank may -the interest must reduce the interest prices to a level that stimulates the economy when trade uncertainty proves to be more harmful to growth. Dovvint notes of the ECB policy makers may consider the shared currency in the near future.
Euro
The euro is a currency of 19 European Union countries belonging to the eurozone. This is the second most hardly traded currency behind the US dollar. In 2022 it accounted for 31% of all currency exchange transactions, with an average daily turnover of over $ 2.2 trillion a day. EUR/USD is the most strongly traded currency pair in the world, accounting for an estimated 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 a Eurozone reserve bank. The ECB sets interest rates and manages monetary policy. The main authority of the ECB is to maintain price stability, which means either controlling inflation or stimulating growth. Its main tool is to raise or lower interest rates. Relatively high interest rates – or higher interest rate expectations – usually benefits the euro and vice versa. The ECB Council makes monetary policy decisions at meetings eight times a year. Decisions are made by Christine Lagarde, President of the EURSUONE and six permanent members, including ECB President.
Eurozone inflation data measured by a harmonized index of consumer prices (HICP) is an important econometric for the euro. If inflation increases more than expected, especially if the ECB's 2% goal, it obliges the ECB to increase interest rates to control it. Relatively high interest rates compared to its colleagues usually benefit the euro as it makes the area more attractive to global investors to park their money.
The data releases the health of the economy and can affect the euro. Such indicators such as GDP, production and service PMI, employment and consumer emotion studies can all affect the direction of the currency. A strong economy is good for the euro. Not only does it attract more foreign investment, it can encourage the ECB to set interest rates that directly strengthen the euro. Otherwise, if the economic data is weak, the euro is likely to fall. The economic data of the four largest economy in the euro area (Germany, France, Italy and Spain) are particularly important as they account for 75% of the eurozone economy.
Another important publication of the euro is the trade balance. This indicator measures the difference between what the state earns from its exports and what it spends on imports over a period of time. If the state produces exports of highly coveted exports, its currency will be obtained from purely additional demand from foreign buyers who want to buy those goods. Therefore, the positive balance of net trade strengthens the currency and, on the contrary, to obtain a negative balance.
