- EUR/USD may lose its ground as the US Dollar receives support from easing trade tensions.
- President Trump announced a "major" trade deal with the United Kingdom, although key tariffs remain at 10%.
- US Initial Jobless Claims dropped to 228,000 for the week ending May 3, slightly beating expectations.
The EUR/USD pair trimmed daily losses and is trading around 1.1230 during Friday's Asian session. The pair depreciated as the US Dollar (USD) found support from upbeat US economic data and signs of easing trade tensions.
US President Donald Trump announced a "major" trade deal with the United Kingdom (UK), although key tariffs remain at 10%, which has tempered market optimism. Attention now turns to preliminary US-China trade talks set for this weekend in Switzerland, but both sides have downplayed expectations of a breakthrough.
Trump continues to take a hardline stance on China, particularly after appointing a new envoy to Beijing. Although discussions around potential tariff exemptions are underway, the US administration remains cautious, with Trump stating they are “not looking for so many exemptions.”
On the data front, US initial jobless claims fell to 228,000 for the week ending May 3, slightly below expectations and down from the previous week’s unrevised figure of 241,000. The seasonally adjusted insured unemployment rate held steady at 1.2%. However, the four-week moving average edged higher to 226,000, and continuing jobless claims dropped by 29,000 to 1.879 million for the week ending April 26.
Meanwhile, the Euro (EUR) remains under pressure as markets increasingly price in further rate cuts by the European Central Bank (ECB), possibly as soon as the June meeting. ECB officials have voiced concern over the Eurozone's economic outlook, although they maintain confidence that inflation will sustainably return to the 2% target by year-end.
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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD: Bears await break below 1.1200 ahead of US-China joint statement
EUR/USD attracts some sellers on Monday, though it lacks bearish conviction. A break below 200-period SMA on H4 should pave the way for deeper losses. Any attempted move up is likely to confront a stiff barrier near the 1.1250 region.
GBP/USD trades with negative bias below 1.3300 amid modest USD strength
GBP/USD attracts some sellers as the US-China trade deal eases US recession fears and boosts the USD. The US-UK trade agreement and the BoE’s cautious tone support the GBP and limit losses for the major. Traders now look forward to speeches from BoE officials and FOMC members for some meaningful impetus.
Gold price struggles near one-week low; US-China joint statement awaited
Gold price kicks off the new week on a weaker note in reaction to the optimism over the US-China trade deal. Easing US recession fears and the Fed’s hawkish pause underpin the USD, and further weigh on the commodity. The XAU/USD bears await details on the US-China agreement before positioning for any meaningful downside.
Bitcoin awaits catalyst to push BTC above $109,000, US-UK and China deals fails to trigger rally
The United States unveiled its first major trade deal with the UK last week. The announcement was followed by talks of a highly anticipated deal with China. Both developments failed to catalyze a re-test of the all-time high in Bitcoin.
Why the UK-US trade deal won’t herald a wider tariff climbdown
For Britain, the UK-US deal secures lower tariffs without compromising forthcoming UK-EU talks. And for the US, it signals to investors that the administration is prepared to be flexible on tariffs. But we're sceptical that the deal will translate into a much wider de-escalation in US tariff policy.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.