EUR/USD Forecast: Euro buyers return as markets digest US tariff headlines
- EUR/USD reversed its direction and reclaimed 1.1300 following earlier decline.
- The US Dollar struggles to hold its ground after mixed US data, tariff headlines.
- The near-term technical outlook points to a bullish tilt.
EUR/USD staged a decisive rebound and turned positive on the day above 1.1300 following the sharp decline seen in the Asian session. The pair's technical outlook highlights a bullish shift in the near term.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.51% | -0.22% | -0.27% | -0.33% | -0.45% | -0.32% | -0.33% | |
| EUR | 0.51% | 0.31% | 0.23% | 0.18% | 0.12% | 0.18% | 0.16% | |
| GBP | 0.22% | -0.31% | -0.08% | -0.11% | -0.17% | -0.14% | -0.22% | |
| JPY | 0.27% | -0.23% | 0.08% | -0.06% | -0.19% | -0.09% | -0.15% | |
| CAD | 0.33% | -0.18% | 0.11% | 0.06% | -0.17% | 0.00% | -0.12% | |
| AUD | 0.45% | -0.12% | 0.17% | 0.19% | 0.17% | 0.07% | -0.05% | |
| NZD | 0.32% | -0.18% | 0.14% | 0.09% | -0.00% | -0.07% | -0.12% | |
| CHF | 0.33% | -0.16% | 0.22% | 0.15% | 0.12% | 0.05% | 0.12% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
News of a federal court blocking United States (US) President Donald Trump's reciprocal tariffs triggered a risk rally late Wednesday. Boosted by the improving sentiment around the US economic outlook following this headline, the US Dollar (USD) gathered strength against its rivals and caused EUR/USD to drop toward 1.1200.
Mixed macroeconomic data releases from the US, alongside comments from Director of the US National Economic Council (NEC) Kevin Hassett, who said that they were confident in the success of the tariff ruling appeal, weighed on the USD in the second half of the day. As a result, the pair gathered bullish momentum and broke above 1.1300.
The data published by the US Department of Labor showed that there were 240,000 first-time applications for unemployment benefits in the week ending May 24. This reading followed 226,000 applications in the previous week and came in worse than the market expectation of 230,000. Meanwhile, the US Bureau of Economic Analysis revised the annualized Gross Domestic Product (GDP) contraction for the first quarter to 0.2% from the 0.3% reported in the initial estimate.
Later in the American session, several Federal Reserve (Fed) policymakers will be delivering speeches. Investors will keep a close eye on the performance of US stock markets as well. In case risk flows dominate the action, with Wall Street's main indexes posting strong gains after the opening bell, the USD could stay resilient against its rivals, limiting EUR/USD upside.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart climbed above 50 and EUR/USD rose above the 200-period Simple Moving Average (SMA), pointing to a buildup of bullish momentum.
On the upside, 1.1380 (Fibonacci 23.6% retracement of the latest uptrend) aligns as the first resistance level before 1.1430 (static level) and 1.1500 (static level, round level). Looking south, supports could be spotted at 1.1315 (200-period SMA), 1.1270 (100-period SMA, Fibonacci 38.2% retracement) and 1.1180 (Fibonacci 50% retracement).
Euro FAQs
The Euro is the currency for the 19 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
