EUR/USD News (Euro US Dollar)


EUR/USD is pressured under 1.09 amid upbeat German data

EUR/USD is trading below 1.09 as ongoing SIno-American tensions boost the safe-haven US dollar. The German IFO figures for May beat expectations with 79.5 points in May. Coronavirus figures in Europe are declining.

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Technical Overview

The four-hour chart is showing that critical support awaits at 1.0870, which is the confluence of the 100 and 200 Simple Moving Averages, a swing high from early May and soon also the uptrend support line that has been accompanying the currency pair since mid-May.

Break or bounce? Momentum is to the downside, and EUR/USD is trading just below the 50 SMA, so the tendency is to the downside. 

Below 1.0870, the next lines to watch are 1.0825, 1.0780, and 1.0765.

Resistance awaits at 1.0890, a peak from mid-May, followed by 1.0920, 1.0950, and 1.0975.

See: Negative Rates: Only good for downing currencies?


Fundamental Overview

The euro has reasons to fall, the dollar motives to rise – will it be enough to break below a crucial confluence of support? 

Sino-American tensions have refused to wane over the weekend and continue supporting the safe-haven greenback.

Lawmakers in Washington are advancing a bill that would sanction Chinese officials for human rights violations in Xinjiang. The world has been watching protests in Hong Kong against a suggested Chinese law that would tighten Beijing's grip on the territory, with the West angry but seemingly unwilling to act. China is unhappy with closer relations between America and Taiwan. 

The world's largest economies are also at odds over the origins of coronavirus. Authorities in China said that bat viruses were present in the Wuhan lab suspected by some to be the source of COVID-19, yet said the disease that is gripping the world did not originate from there. 

The silver lining remains that both sides remain committed – at least for now – to the trade deal. That is limiting the dollar's gains.

In the old continent, investors have curbed their enthusiasm over the Franco-German €500 billion plan that includes funding by the European Commission and handing out grants to the hardest-hit countries. The "Frugal Four" – Austria, the Netherlands, Sweden, and Denmark – prefer loans and want conditionality, something that will rattle Italy and Spain. 

As with everything in Europe, things are moving slowly, and a final decision may have to wait until the next leaders' summit in mid-June. While the news is weighing on the euro, investors still expect Germany's backing of the plan to win the day and support the recovery.

In the meantime, coronavirus statistics remain encouraging in Europe, with substantial falls in the number of deaths and new infections. Spain and Italy have continued easing restrictions, and Germany's reproductive indicator (R) remains below 0.

On the other side of the pond, mortalities in the US are getting close to 100,000, with only a moderate deceleration. Nevertheless, President Donald Trump insists on reopening the economy quickly and is unwilling to consider reimposing lockdowns if a second wave strikes. 

Source: Financial Times

The German IFO Business Climate came out at 79.5 points in May, beating estimates and a bounce from April. On the other hand, the Current Assessment component disappointed with 78.9 points. Clemens Fuest, the institution's president, said that the mood is not catastrophic but still cautious. He added the fear of a second wave is not so pronounced in Germany and the reopening of retail explains the improvement in the mood. 



Big Picture

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Editors' picks

EUR/USD is pressured under 1.09 amid upbeat German data

EUR/USD is trading below 1.09 as ongoing SIno-American tensions boost the safe-haven US dollar. The German IFO figures for May beat expectations with 79.5 points in May. Coronavirus figures in Europe are declining.

EUR/USD News

GBP/USD is trading below 1.22 amid negative rates speculation

GBP/USD is trading below 1.22, as investors continue speculating about the BOE setting negative rates. PM Johnson is under pressure after his senior adviser violated the lockdown. The UK is on a bank holiday today.

GBP/USD News

USD/JPY clings to gains near 50-day SMA, bulls await a move beyond 108.00 mark

USD/JPY regains some positive traction on Monday amid a positive mood around equity markets. Concerns about worsening US-China tensions seemed to be the only factor capping further gains. Sustained move beyond 50-day SMA, 108.00 mark needed to confirm any near-term bullish bias.

USD/JPY News

Gold trades with modest losses, holds above $1722 support zone

Gold met with some fresh supply on Monday, albeit lacked any strong follow-through selling and was last seen trading with only modest losses, just below $1730 level.

Gold News

WTI: Off daily highs, still above $33.00 as US-China tension looms

WTI retreats from the daily high of $33.84. US dollar regains traction amid fresh woes concerning Hong Kong issue. Optimism surrounding the economic restart puts the floor under the oil prices.

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Influential Institutions & People for the EUR/USD

The Euro US Dollar can be seriously affected by news or the decisions taken by two main central banks:

The European Central Bank (ECB) is the central bank empowered to manage monetary policy for the Eurozone and maintain price stability, so that the euro’s purchasing power is not eroded by inflation. The ECB aims to ensure that the year-on-year increase in consumer prices is less than, but close to 2% over the medium term. Another of its tasks is one of controlling the money supply. The European Central Bank’s work is organized via the following decision-making bodies: the Executive Board, the Governing Council and the General Council. Christine Lagarde is the President of this organism. 

On the other hand we found The Federal Reserve System (Fed) wich is the central banking system of the United States. Fed has two main targets: to keep unemployment rate to their lowest possible levels and inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors, partially presidentially appointed Federal Open Market Committee (FOMC). The FOMC organizes 8 meetings in a year and reviews economic and financial conditions. Also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth.


Christine Lagarde

Christine Lagarde was born in 1956 in Paris, France. Graduated from Paris West University Nanterre La Défense and became President of the European Central Bank in November 1st 2019. Prior to that, she served as Chairman and Managing Director of the International Monetary Fund between 2011 and 2019. Lagarde previously held various senior ministerial posts in the Government of France: she was Minister of the Economy, Finance and Industry (2007–2011), Minister of Agriculture and Fishing (2007) and Minister of Commerce (2005–2007).

Jerome Powell

Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. His term as a member of the Board of Governors will expire January 31, 2028. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.

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About EUR/USD

The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs in the world. This group also includes the following currency pairs: GBP/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The popularity is due to the fact that it gathers two main economies: the European and American (from United States of America) ones. This is a widely traded currency pair where the Euro is the base currency and the US Dollar is the counter currency. Since the EUR/USD pair consists of more than half of all the trading volume worldwide in the Forex Market, it is almost impossible for a gap to appear, let alone a consequent breakaway gap in the opposite direction.

Normally, it is very quiet during the Asian session because economic data that affects the fundamentals of those currencies is released in either the European or U.S. session. Once traders in Europe get to their desks a flurry of activity hits the tape as they start filling customer orders and jockey for positions. At noon activity slows down as traders step out for lunch and then picks back up again as the U.S. comes online. If there is important U.S. data we can expect quiet markets just ahead of the number. U.S. economic news have the ability to either reinforce an existing trend or reverse it depending on by how much it missed or beat expectations with the EUR/USD news. By 5:00 GMT liquidity leaves the market once again as European traders close out positions and head home.

Related pairs

GBP/USD

The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. This group also includes the following currency pairs: EUR/USD, USD/JPY, AUD/USD, USD/CHF, NZD/USD and USD/CAD. The pair is also called 'The Cable', reffering to the first Transatlantic cable that was crossing the Atlantic Ocean in order to connect Great Britain with the United States of America. This term was originated in the mid-19th century and it makes GBP/USD one of the oldest currency pairs in the world.

The popularity of the Pound Dollar is due to the fact that represents two strong economies: British and American (from United States of America). The Cable is a widely observed and traded currency pair where the Pound is the base currency and the US Dollar is the counter currency. After the result of the Brexit referendum, where the majority of the British voted to abandon the European Union, GBP/USD has been suffering some turbulence in the Forex market as a consequence of the associated risks of leaving the single market.

USD/JPY

The USD/JPY (or US Dollar Japanese Yen) currency pair is one of the 'Majors', the most important pairs in the world. Japanese Yen has a low interest rate, normally used in carry trades, that's why is one of the most trades currencies worldwide. In the USD/JPY the US Dollar is the base currency and the Japanese Yen is the counter currency. The pair represents American (from United States of America) and Japanese economies.

Trading the USD/JPY currency pair is also known as trading the "ninja" or the "gopher", although this last name is more frequently used when reffered to the GBP/JPY currency pair. The US Dollar Japanese Yen usually has a positive correlation with the following two pairs: USD/CHF and USD/CAD. The nature of this correlation is dued to the fact that both currency pairs also use the US Dollar as the base currency, such as USD/JPY. The value of the pair tends to be affected when the two main central banks of each country, the Bank of Japan (BoJ) and the Federal Reserve Bank (Fed), face serious interest rate differential.