EUR/USD nudges higher as the US Dollar pulls back with risk aversion easing
- President Trump said that he needs two weeks to decide whether to strike Iran, and the markets sigh with relief.
- An ebbing risk aversion is providing some support to the Euro as safe-haven demand eases.
- EUR/USD remains on a bearish correction from 1.1630 highs.
The EUR/USD pair is trading higher for the third consecutive day on Friday and has returned above the 1.1500 level, trading at 1.1520 at the moment of writing. US President Donald Trump's comments saying that he needs two weeks to decide on entering the Middle East conflict have eased investors' fears of an imminent attack and provided some support to the Euro.
The pair, however, remains on track to a moderate weekly loss, as investors' concerns that the war between Iran and Israel might turn into a wider regional conflict have kept risk appetite subdued, boosting demand for the US Dollar and other traditional safe havens.
Beyond that, the sharp increase in Oil prices poses another challenge for a soft Eurozone Economy while the trade relationship with the US remains highly uncertain. The negotiations between the US and European authorities remain stalled just two weeks before Trump's July 9 deadline to cut a deal or face high tariffs.
Earlier this week, the Federal Reserve (Fed) left interest rates unchanged and maintained its projection of two cuts in 2025, but Chairman Jerome Powell struck a hawkish note, downplaying the dot plot and warning about higher inflationary pressures stemming from Trump's tariffs. Powell's press release turned the decision into a "hawkish hold," which gave additional support to the US Dollar.
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 | -0.17% | 0.03% | -0.09% | -0.04% | -0.08% | -0.02% | -0.10% | |
| EUR | 0.17% | 0.17% | 0.08% | 0.13% | 0.25% | 0.16% | 0.09% | |
| GBP | -0.03% | -0.17% | 0.00% | -0.03% | 0.08% | -0.02% | -0.09% | |
| JPY | 0.09% | -0.08% | 0.00% | 0.09% | -0.02% | -0.09% | -0.07% | |
| CAD | 0.04% | -0.13% | 0.03% | -0.09% | -0.01% | -0.21% | -0.07% | |
| AUD | 0.08% | -0.25% | -0.08% | 0.02% | 0.00% | 0.18% | -0.17% | |
| NZD | 0.02% | -0.16% | 0.02% | 0.09% | 0.21% | -0.18% | -0.07% | |
| CHF | 0.10% | -0.09% | 0.09% | 0.07% | 0.07% | 0.17% | 0.07% |
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: The Euro extends its recovery as risk aversion eases
- Market sentiment improved somewhat on Friday after Trump eased fears of an imminent attack on Iran, and news reports suggest that US and Iranian officials are keeping diverse lines of direct and indirect negotiations. There is also news that Iranian diplomats will meet Eurozone officials to hold nuclear talks on Friday, which opens a possibility of a peace agreement.
- Meanwhile, the Middle East conflict enters its eighth day with Tehran and Tel Aviv exchanging missiles and threats. Israel attacked several military and nuclear targets overnight in an attempt to cripple the Islamic Republic's aim to obtain a nuclear weapon and topple its Government.
- Risk aversion eases somewhat as Trump calmed fears of US involvement in the war, but market sentiment remains frail. Oil prices have escalated to $73, about 12% above May's range, which adds a new layer of uncertainty to a global economy already threatened by higher tariffs from the US that will severely restrict international trade.
- The Federal Reserve kept interest rates on hold at the 4.25%-4.50% range as expected, as well as the projections of two interest rate cuts by year end, but the economic growth expectations for 2025 were downgraded to 1.4% from the previous 1.7%, and inflation expectations hiked to 3% from the previous 2.7%. A context of softer growth and higher inflation poses a dilemma for the central bank.
- On Thursday, European Central Bank (ECB) President Christine Lagarde pitched for greater regional trade between the European Union and neighboring economies to offset losses from global fragmentation during an event in Kyiv.
- The macroeconomic calendar is thin on Friday. In the US, the highlight will be the Philadelphia Fed Manufacturing Survey, which is expected to show some minor improvement, yet with the index remaining in negative territory for the third consecutive month.
- Somewhat later, the preliminary Consumer Confidence Index released by the European Commission is expected to have improved to -14.5 in June from -15.2 in the previous month, still at levels consistent with a soft economic growth.
EUR/USD remains on a bearish correction from 1.1630
EUR/USD is trading within a descending channel since peaking at 1.1630 on June 12. The pair has pared some losses over the last three days, but it remains on track for a moderate weekly loss. From a technical perspective, the bearish correction from last week's highs remains in play.
Upside attempts are being capped around the June 18 high at 1.530 on Friday. The pair should confirm above that level and breach the top of the descending channel, now at 1.1570, to break the immediate bearish structure and shift the focus back to the mentioned 1.1630 high.
On the downside, immediate support is at 1.1445 (June 19 low) and the descending channel trendline support, at 1.1440. A bearish reaction below that level would increase pressure towards 1.1370, the June 6 and 10 lows, and the 61.8% Fibonacci retracement level drawn from the May 29 low of 1.1210 to the June 12 high of 1.1630.
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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