- EUR/USD lost another 0.3% on Monday, returning to 1.0300.
- President Trump signed the sweeping fee late Monday.
- This week, US inflation data to control market flows.
The EUR/USD fell by about a third of 1% on Monday, returning to the 1.0300 handle as market sentiment took the knee. Investors are waiting for a clearer signal from central bank policymakers, but a new executive order from President Donald Trump on tariffs has stoked the outlook.
Read more: US President Donald Trump signs off for 25% tariffs on steel and aluminum
This week, data in Europe is being significantly limited. The appearance from European Central Bank President Christine Lagarde failed to move the needle in a meaningful way, a routine outing that has become the norm for talks from ECB policymakers. Federal Reserve Chairman Jerome Powell gives his latest testimony to the US Senate Banking Committee. Federal Reserve Chairman Powell is expected to face questions about how he will respond to the decline and current trends of President Trump's tariff threat.
Germany's final harmonization index of consumer prices for the year ended January is scheduled for Thursday along with Pan-EU GDP for the fourth quarter, scheduled for Friday. Neither data point is expected to make much of a move.
Key data points this week are the US Consumer Price Index (CPI) inflation scheduled for Wednesday and the US Producer Price Index (PPI) scheduled for Thursday.
EUR/USD price forecast
Three consecutive days of EUR/USD paced the pair to rediscover the recent technical lows. The fiber overcame the technical recovery above the 50-day index moving average (EMA) in late January, and bids have been shattering steadily ever since. The 1.0200 handle is next rising. The bear slowly crushes the bull from the photo.
EUR/USD Daily Chart
Euro FAQ
The euro is the currency of 19 European Union countries that belong to the eurozone. This is the world's second most frequently traded currency behind the US dollar. In 2022, it accounted for 31% of all forex trading, with an average daily turnover rate of over $2.2 trillion per day. EUR/USD is the most frequently traded currency pair in the world, with all transactions taking an estimated 30% off, including EUR/JPY (4%), EUR/GBP (3%), EUR// AUD (2%) follows.
The European Central Bank (ECB) in Frankfurt, Germany is the reserve bank of the eurozone. The ECB sets interest rates and manages monetary policy. The ECB's main mission is to maintain price stability. This means controlling inflation or stimulating growth. Its main tool is raising or lowering interest rates. A relatively high interest rate, or higher interest rate expectation – usually benefits the euro and vice versa. The ECB Management Council makes monetary policy decisions at its eight meetings held annually. The decision will be made by six permanent members, including the head of the national bank in the eurozone and Christine Lagarde, the president of the ECB.
Eurozone inflation data is measured by a harmonious index of consumer prices (HICP) and is an important econometric for the euro. If inflation rises more than expected, the ECB requires that interest rates be raised and reverted back to control, especially if it exceeds the ECB's 2% target. A relatively high interest rate compared to its counterpart usually benefits the euro. This is because it makes the region more attractive as a place for global investors to park their money.
The data assesses the health of the economy and could affect the euro. Indicators such as GDP, Manufacturing and Services PMIS, Employment, and Consumer Sentiment Survey can all affect the direction of all currencies. A strong economy is good for the euro. It could not only attract more foreign investments, but it could also encourage the ECB to raise interest rates. This will directly strengthen the euro. Otherwise, the euro could fall if economic data is weak. Economic data for the four largest economies (Germany, France, Italy, Spain) (Germany, France, Italy, Spain) is particularly important, as it accounts for 75% of the eurozone economy.
Another important data release for the euro is trade balances. This indicator measures the difference between what a country makes from exports and what it spends on imports over a certain period of time. If a country produces highly popular exports, the currency acquires pure value from the extra demand generated from foreign buyers seeking to buy these goods. Therefore, a positive net trade balance strengthens the currency and vice versa.
