- The EUR/USD quotes the strongest of 1,1520 in the first part of the Asian session on Tuesday.
- The US dollar falls widely after Trump intensified his attacks against the Powell of the Fed.
- The EU considers modifying the rules on methane for American gas to support commercial negotiations.
The EUR/USD pair extends its rise to around 1,1520 during the first part of the Asian session on Tuesday, pressured by a weaker US dollar (USD). The US dollar index (DXY) fell to its lowest level since March 2022, about 98.30, while operators continued to lose confidence in the US economy.
The president of the USA, Donald Trump, intensified his criticism of the president of the Federal Reserve (FED), Jerome Powell, on Monday through social networks, calling him a “great loser” and warning that the US economy could slow down if the Fed does not act to cut rates immediately. Concerns about a deceleration in the US, the world’s largest economy, and more concerns that Trump could fire Powell of the Fed exert some sale pressure on the dollar and act as a wind in favor for the Eur/USD.
“It is really a buffet for any dollar bassist … From the greatest uncertainty about self-loss by tariffs to the loss of faith even before Powell’s news,” said Vishnu Varrathan, head of Macro Research for Asia Ex-Japan in Mizuho.
In addition, the European Union (EU) is considering adjusting the rules about methane for American gas to help in commercial negotiations, Reuters reported Monday. The European Commission is working on its offer for commercial negotiations with the US to try to avoid tariffs planned by Trump, with both parties pointing out that energy could be part of a broader commercial agreement. Optimism about commercial negotiation could provide some support to the common currency against USD in the short term.
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
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
