EUR/USD drops around 1,1400 due to uncertainty about tariffs

  • The EUR/USD is softened around 1,1415 in the early Asian session on Tuesday.
  • Besent said that it depends on China to descale the commercial war.
  • Operators increase their bets on ECB rates reductions.

The EUR/USD pair goes back to about 1,1415 during the early Asian session on Tuesday. The euro (EUR) weakens against the US dollar (USD) in the midst of an increase in additional tracts of rates of the European Central Bank (ECB) in June. Investors prepare for new developments in the US commercial policy before the publication of the highly agricultural payroll data (NFP) of the USA on Friday.

The president of the United States, Donald Trump, said there have been progress and that he has spoken with the Chinese president, Xi Jinping, although Beijing has denied that trade negotiations are being carried out. The US Treasury Secretary, Scott Besent, said he had interactions with the Chinese authorities last week, but did not mention tariffs.

Besent said on Monday that the US government is in contact with China, but that it is up to Beijing to take the first step to display the tariff fight with the US due to the commercial imbalance between the two nations. Investors will closely observe the relationship between the US and China. Trump’s chaotic trade chaotic has affected confidence in US assets, and shared currency has emerged as an alternative destination for investor cash. Any climbing signal in the commercial war between the US and China could weigh on the dollar and act as a tail wind for the Eur/USD torque.

On the other side of the ocean, Reuters reported on Saturday that ECB policies are increasingly sure about the reduction of interest rates in June as inflation continues to decrease. The head of ECB policies, Olli Ren, said on Monday that the Central Bank could reduce interest rates below the neutral level that the economy in balance maintains.

Euro Faqs


The euro is the currency of the 19 countries of the European Union that belong to the Eurozone. It is the second most negotiated currency in the world, behind the US dollar. In 2022, it represented 31 % of all foreign exchange transactions, with an average daily business volume of more than 2.2 billion dollars a day. The EUR/USD is the most negotiated currency pair in the world, with an estimate of 30 %of all transactions, followed by the EUR/JPY (4 %), the EUR/GBP (3 %) and the EUR/AU (2 %).


The European Central Bank (ECB), based in Frankfurt (Germany), is the Eurozone reserve bank. 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 rise or decrease in interest rates. Relatively high interest rates (or the expectation of higher types) usually benefit the euro and vice versa. The GOVERNMENT BOOK of the ECB makes decisions about monetary policy in meetings that are held eight times a year. The decisions are made by the directors of the National Banks of the Eurozone and six permanent members, including the president of the ECB, Christine Lagarde.


Eurozone inflation data, measured by the harmonized consumer prices index (IPCA), are an important economic indicator for the euro. If inflation increases more than expected, especially if it exceeds 2% of the ECB, it forces the ECB to rise interest rates to control it again. Relatively high interest rates compared to their counterparts usually benefit the euro, since they make the region more attractive as a place for global investors to deposit their money.


Published data measure the health of the economy and can have an impact on the euro. Indicators such as GDP, manufacturing and services PMIs, employment and consumer trust surveys can influence the direction of the single currency. A strong economy is good for the euro. Not only attracts more foreign investment, but it can encourage the ECB to raise interest rates, which will directly strengthen the euro. Otherwise, if economic data is weak, the euro is likely to fall. The economic data of the four largest economies in the euro zone (Germany, France, Italy and Spain) are especially significant, since they represent 75% of the economy of the euro area.


Another important fact that is published on the euro is the commercial balance. This indicator measures the difference between what a country earns with its exports and what you spend on imports during a given period. If a country produces highly demanded export products, its currency will gain value simply by the additional demand created by foreign buyers seeking to buy those goods. Therefore, a positive net trade balance strengthens a currency and vice versa in the case of a negative balance

Source: Fx Street

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