- EUR/USD progress, because lower inflation sparks in the US require aggressive Fed rates.
- Trump calls a full percentage point of FED funds after CPI.
- ECB Careful decision makers, but inflation prospects indicate further tuning.
. EUR/USD It expanded during the North American session, but remains shy in cleaning the number 1,1500, after the release of a tender inflation report in the United States (USA), which could persuade Federal reserve (Fed) to reduce the cost of the loan in the near future. At the time of writing, the pair trads at 1.1482, by over 0.50%.
Data in the US revealed that Consumer price indicator (CPI) In May it does not meet the estimates because the prices are still lower. After issuing the data, US President Donald Trump published in his social network that the FED should reduce the FED funds by one whole percentage point.
Although inflation has fallen, some analysts design that households in the coming month feel the influence of tariffs. Meanwhile, positive commercial messages have appeared regarding negotiations between the USA and China, because the Wall Street Journal (WSJ) revealed that China is setting a six -month license limit for export of scarce lands for American producers and producers.
Meanwhile, in the euro area (EU), decision makers of the European Central Bank (EBC) appeared on the headlines, although they failed to carry out EUR/USD couple. Vujcic EBC said that he was looking for greater brightness in the field of trade, while Kazaks noticed that “it is quite likely that 2% inflation would require further cuts to tune,” he said by Econostream on X.
The main economist of ECB, Philip Lane, added that the reduction in the rate last week helped explain the bank’s attitude of the bank’s policy to bring inflation to the goal.
Within a week, it is expected that EUR/USD is largely influenced by the release of American numbers of the manufacturer’s price index (PPI) along with the initial report of the unemployed claims. On the other side of the pond, the EU schedule has no economic data, but ECB officials led by Vice -President Luis de Guindos will cross the wires.
Euro price this week
The table below shows the percentage change in the euro (EUR) compared to the main currencies this week. The euro was the strongest in relation to the American dollar.
| USD | EUR | GBP | JPy | BOOR | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.85% | -0.19% | -0.32% | -0.19% | -0.12% | -0.23% | -0.28% | |
| EUR | 0.85% | 0.65% | 0.51% | 0.65% | 0.76% | 0.62% | 0.56% | |
| GBP | 0.19% | -0.65% | -0.04% | 0.00% | 0.12% | -0.03% | -0.08% | |
| JPy | 0.32% | -0.51% | 0.04% | 0.12% | 0.15% | 0.03% | -0.08% | |
| BOOR | 0.19% | -0.65% | -0.01% | -0.12% | 0.06% | -0.04% | -0.09% | |
| Aud | 0.12% | -0.76% | -0.12% | -0.15% | -0.06% | -0.14% | -0.19% | |
| NZD | 0.23% | -0.62% | 0.03% | -0.03% | 0.04% | 0.14% | -0.05% | |
| CHF | 0.28% | -0.56% | 0.08% | 0.08% | 0.09% | 0.19% | 0.05% |
The heat map shows percentage changes in the main currencies towards each other. The basic currency is collected from the left, and the quote currency is collected from the upper order. For example, if you choose the euro on the left column and go along the horizontal line to the American dollar, the percentage shift displayed in the field will represent the EUR (base)/USD (quote).
Daily Digest Market Movers: EUR/USD SOERS Rena 1.1480, when traders go towards American PPI data
- EUR/USD seems to be ready to test the 1,1500 mark in the near future, because positive news about talks with USA-China may raise the appetite for more risky assets and weigh the American dollar.
- The Secretary of the US Treasury Scott Bessent commented that commercial honesty with China can be achieved by reducing exports to the USA or restoring the balance of the largest economies in the world. He added that the Trump administration is obliged to maintain the status of the American dollar reserve currency.
- Inflation in the US was softer than expected in May. The CPI headline increased by 2.4% y / y, slightly above 2.3% of April, but below the forecast 2.5%. Core CPI remained a constant level of 2.8% y / y, which suggests that the inflation underlying the base remains stable but strong.
- It is expected that PPI for Maja will raise from 2.4% to 2.6% of the installment. The basic PPI data is expected to remain 3.1% higher, unchanged compared to the April print.
- Financial market players do not expect ECB to reduce the rate of deposit interference by 25 base points (BPS) at the July monetary policy meeting.
Euro technical perspectives: EUR/USD Bulls Eyes 1.15 and YTD High
From a technical point of view, it is expected to continue upstairs, because the buyers will aim at a clear break above 1,1500. This will reveal the highest level of 1.1572 on average (YTD), before 1,1600. The relative force indicator (RSI) is stubborn, which indicates the direction upwards, which suggests that the buyers are taking a shoot.
Regardless of the likely scenario, it is that EUR/USD must immaculate the area of ​​1.1450. This would set up a pair to retreat towards a 20-day straight movable average (SMA) to 1.1346 before testing 1,1300.
EBC FAQ
The European Central Bank (EBC) in Frankfurt, Germany is a bank reserve bank. EBC establishes interest rates and manages monetary policy for the region. The basic mandate of the ECB is to maintain price stability, which means maintaining inflation at about 2%. Its main tool to achieve this is to raise or reduce interest rates. Relatively high interest rates usually cause a stronger euro and vice versa. The ECB Managing Council makes decisions regarding monetary policy at meetings taking place eight times a year. Decisions are made by the heads of national banks of the euro area and six constant members, including the President of EBC, Christine Lagarde.
In extreme situations, the European Central Bank may protect the political tool called quantitative fox. QE is a process in which ECB prints the euro and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually causes a weaker euro. QE is a last resort when just lowering interest rates is unlikely to achieve the goal of price stability. EBC used it during the great financial crisis in 2009–2011, in 2015, when inflation remained stubborn low, as well as during Covid pandemic.
Quantitative tightening (QT) is the reverse of QE. This is undertaken after QE when economic recovery is underway and inflation begins to grow. While in QE, the European Central Bank (EBC) buys government and corporate bonds from financial institutions to ensure them liquidity, in QT EBC it stops buying more bonds and stops reinvesting the main maturation in the bonds it already has. It is usually positive (or stubborn) for the euro.
