EUR/USD moves above 1.1150 due to improved market optimism
- EUR/USD gains ground due to improved market sentiment amid easing geopolitical tensions.
- US Air Force General told that concerns about an imminent broader conflict in the Middle East have diminished.
- Traders await the German GfK Consumer Confidence Survey and Gross Domestic Product data, which are scheduled for release on Tuesday.
EUR/USD recovers its recent losses from the previous session, trading around 1.1170 during the Asian hours on Tuesday. The market optimism prevails after concluding a three-day trip to the Middle East, US Air Force General C.Q. Brown, chairman of the Joint Chiefs of Staff, told Reuters early Tuesday that concerns about an imminent broader conflict in the region have diminished.
An exchange of fire between Israel and Lebanon's Hezbollah did not escalate further. However, Hamas has rejected new conditions proposed by Israel in ceasefire negotiations in Egypt, insisting that Israel adhere to the terms outlined by US President Joe Biden and the UN Security Council.
On the Fedspeak front, San Francisco Federal Reserve President Mary Daly stated on Monday in an interview with Bloomberg TV that "the time is upon us" to begin cutting interest rates, likely starting with a quarter-percentage point reduction. Daly suggested that if inflation continues to slow gradually and the labor market maintains a "steady, sustainable" pace of job growth, it would be reasonable to "adjust policy at the regular, normal cadence."
On the EUR front, traders assess the extent to which consolidated expectations of incoming rate cuts by the Federal Reserve will impact European Central Bank (ECB) borrowing costs. Additionally, GfK Consumer Confidence Survey and Gross Domestic Product (GDP) data will be eyed later in the day.
ECB Governing Council member Olli Rehn stated last week that the slowdown in inflation, coupled with weakness in the Eurozone economy, bolsters the case for lowering borrowing costs next month, according to Bloomberg. The subdued growth outlook in Europe, particularly in manufacturing, reinforces the argument for a rate cut in September.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.07% | -0.04% | 0.12% | -0.04% | -0.18% | -0.22% | -0.04% | |
| EUR | 0.07% | 0.03% | 0.19% | 0.02% | -0.12% | -0.17% | 0.04% | |
| GBP | 0.04% | -0.03% | 0.17% | 0.01% | -0.14% | -0.17% | 0.01% | |
| JPY | -0.12% | -0.19% | -0.17% | -0.16% | -0.30% | -0.35% | -0.15% | |
| CAD | 0.04% | -0.02% | -0.01% | 0.16% | -0.14% | -0.19% | 0.01% | |
| AUD | 0.18% | 0.12% | 0.14% | 0.30% | 0.14% | -0.06% | 0.16% | |
| NZD | 0.22% | 0.17% | 0.17% | 0.35% | 0.19% | 0.06% | 0.19% | |
| CHF | 0.04% | -0.04% | -0.01% | 0.15% | -0.01% | -0.16% | -0.19% |
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).
Euro FAQs
The Euro is the currency for the 20 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.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
