- EUR/USD may find support from improving risk morale amid a possible ceasefire discussion between Trump and Putin this week.
- The US dollar remains constant as traders are cautious before the upcoming retail sales data.
- The euro was strengthened after Germany agreed to repair debts and a significant increase in government spending.
EUR/USD remains a constant about 1.0880 during Asian trading hours, with the US Dollar Company (USD) before the release of retail sales data on Monday. However, Greenback faced the opposite wind after Michigan University (UOM) informed a decrease in the initial consumer morale index in March, as it decreased to 57.9 – the lowest level since November 2022 – from the previous reading of 64.7. This number also came less than the consensus than 63.1.
The markets are widely expecting that the Federal Reserve (Fed) will maintain its current stance of politics when it concludes its two -day meeting on Wednesday. According to the CME Fedwatch tool, traders have lost approximately 75 % of the probability of a quarter -point rate by June.
EUR/USD pair can get support from improving risk morale amid reports of a possible ceasefire discussion between US President Donald Trump and Russian President Vladimir Putin this week. Trump’s envoy, Steve Whitkov, said on Sunday that he expects the two leaders to speak, adding that Putin “accepts the philosophy of” the ceasefire on Trump and his peace, according to The Guardian. Last week, the United States and Ukraine proposed a 30 -day ceasefire to Russia, with Putin’s expression of his support for the initiative.
The euro (EUR) is strengthened after the news that Germany has reached an agreement on debt reform and a significant increase in government spending. Friedrich Mirz, the upcoming advisor, got an agreement with the green and social democratic parties on Friday, before a decisive parliamentarian on Tuesday to reform borrowing rules. If the proposal gets a third of a third, the growing spending plan can provide a large boost to the EUR/USD pair.
Meanwhile, the European Central Bank Vice President (ECB) Lewis de Gindos expressed his concerns on Sunday, noting that President Trump’s policies generate more economic uncertainty compared to the Covid-19 crisis, according to Bloomberg. Gindos noted that the new American administration seems less inclined towards pluralism, which enhances cooperation through judicial states to address global challenges – a transformation described as a major source of instability.
In addition, the European Central Bank’s Board of Directors and Banque De France François Villeroy de Galhau stressed the need for the euro to play a more prominent role on the world stage. In an interview with La Tribune Dimanche during the weekend, Galhau called for the creation of a “strong union of investment savings” to attract international investors to the euro.
Common questions euro
The euro is the currency of the 19 European Union countries belonging to the eurozone. It is the second most traded currency in the world behind the US dollar. In 2022, it represented 31 % of all foreign exchange transactions, with an average daily rotation of more than $ 2.2 trillion per day. EUR/USD is the most trading currency pair in the world, which represents an estimated 30 % of all transactions, followed by EUR/JPY (4 %), EUR/GBP (3 %) and EUR/AUD (2 %).
The European Central Bank (ECB) in Frankfurt, Germany, is the backup bank. The European Central Bank sets interest rates and runs monetary policy. The primary mandate in the European Central Bank is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary performance is to raise or reduce interest rates. Relatively high interest rates – or expect higher rates – usually benefit from the euro and vice versa. The Board of Directors of the European Central Bank is making monetary policy decisions at eight times a year. Decisions are made by the heads of national banks in the eurozone and six permanent members, including the President of the European Central Bank, Christine Lagarde.
The inflation data in the euro area, measured by a coordinated index of consumer prices (HICP), is an important economist for the euro. If inflation increases more than expected, especially if it is 2 % higher than the European Central Bank’s goal, then the European Central Bank is obliged to raise interest rates to return it in control. Relatively high interest rates usually benefit compared to its euro counterparts, as it makes the region more attractive as a place for global investors to stop their money.
Data ejaculates a measurement of economics health and can affect the euro. Indicators such as GDP, manufacturing, PMIS, employment services, and consumer morale surveys can affect the trend of uniform currency. The strong economy is useful for the euro. Not only is to attract more foreign investment, but the European Central Bank may encourage interest rates, which will enhance the euro directly. Otherwise, if economic data is weak, the euro is likely to decrease. Economic data of the four economies in the eurozone (Germany, France, Italy and Spain) are of particular importance, because it represents 75 % of the eurozone economy.
Other important version of the euro is the commercial balance. This indicator measures the difference between what a country gains from its exports and what it spends on imports during a certain period. If a country produces very absolute after exports, its currency will obtain a purely value of the additional demand created from foreign buyers who seek to buy these goods. Therefore, the positive and positive trade balance enhances the currency and vice versa to achieve a negative balance.
