- The EUR/USD flattened on Monday, turning between 1,1400 and 1,1300.
- The multision recovery of the euro against the dollar could be ready for a pause.
- Another decision of the ECB is on the horizon this week, the markets generally expect a defensive cut of a quarterfinal.
The EUR/USD revolved in a messy circle on Monday, playing the levels of 1,1400 and 1,1300 before settling somewhere in the average range. The US dollar continues to weaken in general after the last turn of the Trump administration over its own tariff threats, but the feeling of the market is still warm since investors’ fears on continuous commercial tensions boil in the background.
On Tuesday it will bring a series of medium level feeling indicators in Europe, followed by the US retail sales data scheduled for Wednesday. However, the key element of the EUR/USD Agenda will be the last decision of the European Central Bank (ECB) on Thursday.
The markets overwhelmingly anticipate another cut of a quarter cord by the ECB this week, since those responsible for policies are prepared for the aggravation of the economic repercussions of the tariff policies in constant change of the Trump administration.
EUR/USD price forecast
The EUR/USD price action has been plagued by an intermittent impulse, making a sudden upward advance since it pierced the 200 -day exponential mobile average (EMA) about 1,0650 in early March. The technical inclination still favors bidders at the moment, but technical oscillators are beginning to show warning signs of overcompra conditions.
EUR/USD daily graphics
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.
