- The euro/the US dollar is trading in negative lands near 1.0390 in the Asian session on Friday, losing 0.16 % a day.
- The threat of escalating customs tariffs pulls the euro against the US dollar.
- Federal reserve officials indicated that the interest rates are possible suspended for a period of time.
The US/US dollar pair remains under the pressure of sale near 1.0390 during the Asian trading hours on Friday. The euro (Euro) weakens against the US dollar (USD) amid the mood of the risk. The Personal Consumption Expenditure Index in the United States (PCE) will receive the lead position later on Friday.
US President Donald Trump late on Thursday said that 25 % of imports from Canada and Mexico will enter into force on March 4, not April 2, as suggested the previous day. Trump also stated that the goods from China will undergo an additional duty of 10 %. This week, 25 % promised shipments from the European Union. Trump’s induction uncertainty may affect the common currency in the short term.
Cleveland, Peth Hamak President, said on Thursday that she expects the interest rate of the US Central Bank to be suspended at the present time amid searching for evidence that inflation pressure is due to a 2 % goal. Meanwhile, the Federal Reserve Chairman at Atlanta Rafael Bustic late on Wednesday said that the Federal Reserve should carry interest rates where, at a level that continues to pressure inflation. The caution may be raised by the Federal Reserve and served as an opposite wind for EUR/USD.
Inflation data in the United States for January will be in the spotlight later on Friday. This report can affect market speculation of Federal Reserve monetary policy expectations. Any signs of the most enlarged inflation in the American economy can undermine the US dollar and help reduce the loss of the husband. Financial market pricing is now approximately 68 % that the Federal Reserve will reduce the interest rate at the June Policy meeting after it was held in the march and the wave of meetings, according to the CME Fedwatch tool.
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.