- EUR/USD trades nearly 1.1476 after a miniature violation of 1.1500 after feeding.
- Fed maintains rates; Forecasts show slower growth, inflation.
- Trump open to the Iran meeting, while EBC officials mean the economic weakness of the euro area.
EUR/USD trades almost flat after climbing next to the number 1.1500, after the Federal Reserve decision (FED) to maintain unchanged rates in connection with the growing tensions in the Middle East. This, along with the comments of US President Donald Trump, increased the dollar, limiting the advance of the euro (EUR). At the time of writing, the pair trads at 1.1476, virtually unchanged.
Recently, the Fed maintained rates in the range of 4.25–4.50%, confirming that the economy is developing solidly, with forceful conditions of the labor market. The US Central Bank repeated its commitment to monitoring the risk associated with both sides of the double mandate and confirmed the plans for further limiting its shares in the treasury securities.
In addition, FED officials updated their economic forecasts. The gross domestic product (GDP) was corrected down, the unemployment rate was barely affected, and inflation should be slightly higher.
As for monetary policy, decision -makers see two interest rate discounts at the end of the year.
In addition, US President Donald Trump said that if Iran wants to come to the White House, he said: “I can do it.”
At the same time, Fed Chairman Jerome Powell stood in his gently neutral attitude, confirming that monetary policy is “well prepared to respond” to external shocks, such as tariffs or geopolitical risk.
Earlier, the euro zone (EU) revealed that inflation remains at the target European Central Bank (EBC), according to the May data. Meanwhile, some ECB speakers, led by Mario Centeno and Fabio Panetta, said that the weakness of the EU economy is the cause of greater anxiety in EBC, and sometimes it does not seem to be in line with the target of 2% inflation.
This can pave the way for additional cuts by ECB, although most officials favor the pause in the soothing cycle of the central bank.
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 against the British pound.
| USD | EUR | GBP | JPy | BOOR | Aud | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.50% | 1.07% | 0.39% | 0.78% | -0.40% | -0.20% | 0.84% | |
| EUR | -0.50% | 0.45% | -0.12% | 0.29% | -0.75% | -0.70% | 0.34% | |
| GBP | -1.07% | -0.45% | -0.55% | -0.16% | -1.21% | -1.13% | -0.10% | |
| JPy | -0.39% | 0.12% | 0.55% | 0.39% | -1.09% | -0.91% | 0.04% | |
| BOOR | -0.78% | -0.29% | 0.16% | -0.39% | -1.10% | -0.98% | 0.06% | |
| Aud | 0.40% | 0.75% | 1.21% | 1.09% | 1.10% | 0.08% | 1.13% | |
| NZD | 0.20% | 0.70% | 1.13% | 0.91% | 0.98% | -0.08% | 1.05% | |
| CHF | -0.84% | -0.34% | 0.10% | -0.04% | -0.06% | -1.13% | -1.05% |
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 declines, because the Fed seems to be ready for two rates
- EUR/USD has expanded its losses when Trump opens the door to Iran’s talks, while the Fed Chairman Jerome Powell signal that the rates can remain for some time.
- Powell said: “The impact of tariffs will depend on the level”, adding that “the increase this year will probably be burdened with economic activity and pushes inflation.” He said that “as long as we have a kind of labor market that we have and inflation falls, the right thing is to maintain rates.”
- The initial unemployed claims in the US increased by 245,000 in a week ending on June 14, corresponding to market expectations. Continued claims, used to soften the rate of change of weekly print, fell by 6000 to seasonally corrected by 1.945 million a week ending on June 7.
- Meanwhile, the housing sector showed signs of cooling. May residential starts fell to 1.256 million pieces, which means a decrease in a 9.8% drop from 1.392 million. Building permits have also decreased, fell by 2% compared to the annual rate of 1.393 million from 1.422 million earlier.
- The harmonized consumer price rate (HICP) in May increased by 1.9% y / y, compared to the raise in April by 2.2%. Core Hicp fell from 2.7% to 2.3% of the installment in the same period as projected by economists.
- It should be noted that the latest raise in oil prices, caused by the conflict in the Middle East, can cause inflationary spiral, increasing higher prices and leaving central banks to slightly hawk.
- 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.
Technical perspectives EUR/USD: Fiber will fall below 1.1500 because it wears the eye 1.1450
The euros/USD radiator remains intact, as long as the fiber optic pair is above the 20-day straight movable medium (SMA) at 1.1493. The price action shows that another series of higher levels and higher low levels remains, which can pave the way for further benefits.
For stubborn continuation, the couple must spotless 1,1500 and the highest level of June 17 1,1578. If it is exceeded, the next stop would be 1.1600, and then the highest level of 1.1631 annually. And vice versa, daily closure below 1.1500 paves the way to a challenge of 1.1450. The next key support would be 20-day SMA at 1,1419, followed by 1,1400.
FAQ euro
The euro is the currency of 19 European Union countries, which belong to the euro area. This is the second most frequently commercial currency in the world behind the American dollar. In 2022, it accounted for 31% of all currency transactions, with an average daily turnover of over USD 2.2 trillion per day. EUR/USD is the most rotating currency pair in the world, which is about a 30%discount on all transactions, followed by EUR/JPy (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (EBC) in Frankfurt, Germany is a bank reserve bank. EBC sets interest rates and manages monetary policy. The main mandate of the ECB is to maintain price stability, which means either controlling inflation or stimulating growth. Its main tool is to raise or reduce interest rates. Relatively high interest rates – or waiting for higher feet – will usually bring the benefits of the 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 enduring members, including the President of EBC, Christine Lagarde.
Data on inflation in the euro area, measured by a harmonized consumer price indicator (HICP), are an crucial econometric for the euro. If inflation increases more than expected, especially if it is above the target 2% EBC, it obliges EBC to raise interest rates to restore it to control. Relatively high interest rates compared to its counterparts will usually benefit the euro, because it makes the region more attractive as a place for global investors to park their money.
The data release the health of the economy and can affect the euro. Indicators such as GDP, PMI production and services, surveys regarding employment and consumer moods can affect the direction of the common currency. A forceful economy is good for the euro. It not only attracts more foreign investment, but can encourage EBC to set interest rates, which will directly strengthen the euro. Otherwise, if economic data is delicate, the euro will probably fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are particularly significant because they constitute 75% of the euro area economy.
Another significant issue of data for the euro is the commercial balance. This indicator measures the difference between what the country earns on exports and what spends on imports in a given period. If the country generates a highly sought after export, its currency will gain value only from additional demand created by foreign buyers trying to buy these goods. Therefore, a positive net trade balance strengthens currency and vice versa for a negative balance.
