- EUR/USD trims gains as the US Dollar finds support ahead of the PCE inflation data release.
- A US federal court reversed the previous day’s sentence blocking tariffs and sent the US Dollar tumbling on Thursday.
- In Europe, the focus will be on the German CPI due later today.
EUR/USD extends its reversal from Thursday’s highs, trading below 1.1330 at the time of writing as investors trim their Dollar shorts, ahead of the release of April’s US Personal Consumer Expenditures (PCE) Price Index numbers.
On Thursday, after a US federal court reversed the block on US President Donald Trump’s tariffs, triggering a sharp US Dollar (USD) sell-off.
Investors’ concerns about the erratic trade policy, coupled with growing fears about US fiscal stability, heightened by a tax-slashing bill that is expected to add trillions of Dollars to an already high US debt, are fuelling the “Sell America” trade and undermining the USD over the last two months.
In the macroeconomic front, Thursday’s US data did little to improve markets ’mood, with weekly Initial Jobless Claims rising beyond expectations and the Gross Domestic Product (GDP) confirming that the economy contracted in the first quarter.
In Europe, German Retail Sales data have failed to support the Euro (EUR), increasing concerns about the health of the Eurozone’s major economy, although the impact has been minimal. Investors’ focus is on the German Consumer Prices Index figures, due later in the day.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.35% | 0.15% | -0.09% | 0.06% | 0.39% | 0.09% | 0.09% | |
| EUR | -0.35% | -0.18% | -0.46% | -0.29% | 0.07% | 0.06% | -0.27% | |
| GBP | -0.15% | 0.18% | -0.27% | -0.10% | 0.26% | 0.08% | -0.08% | |
| JPY | 0.09% | 0.46% | 0.27% | 0.15% | 0.57% | 0.34% | 0.23% | |
| CAD | -0.06% | 0.29% | 0.10% | -0.15% | 0.42% | 0.16% | 0.02% | |
| AUD | -0.39% | -0.07% | -0.26% | -0.57% | -0.42% | -0.01% | -0.34% | |
| NZD | -0.09% | -0.06% | -0.08% | -0.34% | -0.16% | 0.01% | -0.33% | |
| CHF | -0.09% | 0.27% | 0.08% | -0.23% | -0.02% | 0.34% | 0.33% |
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).
Daily digest market movers: US Dollar finds support ahead of the PCE report
- The US Dollar dropped sharply after the US Court of Appeals paused the previous day’s ruling of the Court for International Trade, which blocked most of the levies introduced on April 2. The decision brought global trade uncertainty back to the table and increased pressure on all US assets. However, the Greenback found some footing on Friday, with investors bracing for the release of the US Personal Consumer Expenditures (PCE) Price Index, due later in the day.
- US PCE inflation is expected to have ticked up by 0.1% in April, after a flat reading in March, with the yearly rate easing to 2.2% from the previous 2.3% reading. The core figure, of higher relevance to the Federal Reserve (Fed), is expected to show the same monthly performance, with the yearly inflation down to 2.5% from 2.6% in March.
- Data released on Thursday revealed that the US Weekly Jobless Claims increased by 240K last week, well above the 230K expected. The previous week’s reading was revised down to 226K from the previously estimated 227K.
- Apart from that, the first quarter’s US GDP confirmed that the economy contracted, although at a slower-than-expected rate, -0.2% instead of the -0.3% previously reported.
- Furthermore, US consumer spending slowed down against expectations. The core Personal Consumption Expenditures eased to 3.4% in the first quarter, against the 3.5% expected, all in all increasing fears about the economic momentum.
- In the Euro Area, German Retail Sales have shown an unexpected decline in April. Retail consumption fell by 1.1% against expectations of a 0.2% increase, which reveals the soft momentum of the country’s economy.
- The highlight of the day, however, is the German CPI release, which is expected to show some moderation in April, with the yearly CPI steady at 2.1% and the core index easing to 2% from the previous 2.2%. These figures add to the case for further European Central Bank (ECB) easing in June and might hurt the Euro.
Technical analysis: EUR/USD remains capped by the reverse trendline at the 1.1390 area
EUR/USD bounced sharply on Thursday, printing a bullish engulfing candle on the daily chart. This is a positive sign, but it needs to be confirmed by further appreciation above a previous trendline support, now turned resistance, at 1.1390, and also above the weekly high, at 1.1420.
A confirmation above those two levels would shift the focus towards the April 22 high, near 1.1545.
On the contrary, failure to extend beyond 1.1420 might put bears back in control, and increase pressure towards the 1.1220 support zone ahead of the 1.1135 (May 16 low) and 1.1070 (May 12 low) levels.
EUR/USD 4-Hour Chart
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.