- Usd remained stuck in the 1.1300 region on Wednesday.
- It was widely expected that the federal reserve rate was widely expected, but Powell surprised the market.
- Investors still reserve hope on the axis towards price discounts by July.
EUR/USD holds its intermediate ways on Wednesday, as it remains entrenched near the handle of 1.1300 after the latest price call in the FBI, as well as expected expected, albeit with a new set of “waiting and vision” warnings from the Federal Reserve President Jerome Powell. The economic calendar on the European side remains completely average this week, leaving fiber traders to sit and chew on the Federal Reserve, which turns increasingly caution.
Fed’s powerl: The right thing to do is waiting for more clarity
The declaration of the last average in the Federal Reserve highlights that although American workers and economic activity are still strong, concerns about employment and production risks have increased, and this is primarily due to uncertainty related to US tariffs and trade policies. This anxiety among federal reserve officials on economic risks has sparked market forecast for imminent price discounts, temporarily prompted higher levels of the US/dollar to higher levels.
However, the market morale decreased after the Jerome Powell press conference in the Federal Reserve. He stressed that if the American tariff remains, it will hinder the goals of the Federal Reserve for inflation and employment for the rest of the year.
President Powell also warned that the constant uncertainty in politics is likely to lead the Federal Reserve to adopt a continuous position “waiting and seeing” on interest rates. Despite the great negative impacts on consumer confidence and actions caused by the tariff policies raised by the Trump administration, actual economic data has shown a little negative impact, complicating the logical basis for any immediate modifications of interest rates.
According to the Fedwatch tool for the CME, market participants still expect to reduce quarter prices in July. However, the possibility of reserving retention rates in July increased to 30 %, which reduced the market expectations on a wide range of smooth transition to a new price reduction cycle.
Euro/dollar price expectations
EUR/USD found a temporary bottom over a handle of 1.1200, which enhances the price procedure in the 1.1300 area. The fibers have decreased from the highest multiple levels that were deployed to the north directly from 1.1500, but the negative momentum is still limited as euro dealers are waiting for the main market developments before they are strongly pushed in any of the two directions.
The euro graph/daily dollar
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.
