EUR/USD consolidates near highs as investors ramp up bets for Fed rate cuts
- The Euro consolidates gains with the US Dollar on the defensive.
- Weak US data and Trump's attacks on Powell have heightened hopes of further Fed interest rate cuts.
- EUR/USD is wavering around 1.1700 with investors bracing for the US PCE Price Index release.
The EUR/USD pair appreciates for the seventh consecutive day but remains capped below the nearly four-year high at 1.1745 reached on Thursday. The pair is on track for a 2% weekly rally, buoyed by easing geopolitical fears and increasing confidence that the US Federal Reserve (Fed) will cut interest rates two or even three times in the second half of the year.
chair
US President Donald Trump's attacks on the Fed chair, Jerome Powell, and his comments suggesting an early pick of an allegedly more dovish successor, coupled with weak US economic data and voices within the central bank calling for a less restrictive policy, have boosted hopes of easing interest rates.
Data released this week adds to evidence of a US economic slowdown and points in that direction. On Thursday, the first quarter's US Gross
Domestic Product (GDP) was revised lower, to a 0.5% contraction from the 0.2% previously estimated, while on Tuesday, the US Conference Board figures revealed a decline in Consumer Confidence, to economic growth.
In the Eurozone, markets remain driven by an optimistic wave as the fragile truce between Israel and Iran holds and keeps Oil prices at relatively low levels. Beyond that, investors remain hopeful that a higher infrastructure and defence plan, which is expected to be approved after the summer, will boost economic activity in the region.
The main focus today is the US Personal Consumption Expenditures (PCE) Price Index, which will be observed for further clues about the Fed's rate cut calendar. Another moderate inflation reading would cement hopes of a rate cut, probably in September, and might add selling pressure on the US Dollar (USD).
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | 0.03% | -0.01% | 0.02% | 0.07% | -0.02% | 0.15% | |
| EUR | -0.07% | -0.09% | -0.08% | -0.07% | -0.04% | -0.20% | 0.02% | |
| GBP | -0.03% | 0.09% | 0.02% | -0.00% | 0.05% | -0.10% | 0.20% | |
| JPY | 0.01% | 0.08% | -0.02% | 0.01% | 0.05% | -0.20% | 0.21% | |
| CAD | -0.02% | 0.07% | 0.00% | -0.01% | 0.07% | -0.16% | 0.16% | |
| AUD | -0.07% | 0.04% | -0.05% | -0.05% | -0.07% | -0.20% | 0.12% | |
| NZD | 0.02% | 0.20% | 0.10% | 0.20% | 0.16% | 0.20% | 0.33% | |
| CHF | -0.15% | -0.02% | -0.20% | -0.21% | -0.16% | -0.12% | -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: Weak data and Trump's pressure on the Fed are hammering the USD
- The US Dollar depreciated across the board this week. The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, has lost about 1.7% this week and more than 11% in 2025 so far, hit by a mix of a weakening economy, investors' concerns about Trump's erratic trade policy and, ultimately, his attacks to the Federal Reserve's Independence.
- Trump attacked the Fed chair, calling him "terrible" and "an average mentally person" after Powell reiterated the bank's cautious stance towards interest rates, and weighed in on announcing his successor after the summer, more than six months before the end of his term. These comments have boosted hopes of Fed rate cuts, and, more importantly, have put the central bank's independence into question, eroding the US Dollar's reserve currency status.
- In the macroeconomic data domain, the US GDP Annualized was revised down to a 0.5% contraction in the first three months of the year, amid a decline in consumption, following Trump's increase in tariffs for imported goods.
- On the other hand, US Durable Goods Orders increased beyond expectations in May, with a sharp increase in orders for aircraft. The headline reading humped 16.4%, about twice the 8.5% increase expected by the market, while excluding transportation orders grew 0.5% against expectations of a flat reading.
- Weekly Jobless Claims data was mixed, with initial claims for unemployment benefits increasing less than expected, but with continuing claims steady at their highest levels since the post-pandemic period, which strengthens the case for a weakening and adds pressure on the Federal Reserve to cut interest rates further.
- In Europe, the German GFK Consumer Sentiment Survey deteriorated to -20.3 for July from -20 in the previous month. Germans are showing an increasing willingness to save, which weighs on consumption and highlights a sentiment of economic uncertainty.
- Today all eyes will be on the US PCE Prices Index release, the Federal Reserve's inflation gauge of choice, which is expected to show no further evidence of the impact of tariffs on consumer prices. The headline inflation is expected to have grown at a steady 0.1% pace in May, with year-on-year growth accelerating to 2.3% from 2.1% in the previous month. The core Index is also seen unchanged at 0.1% in the month and 2.6% Y-o-Y, up from 2.5% in April.
EUR/USD is struggling to consolidate above 1.1700
EUR/USD maintains its bullish trend intact on Friday, favoured by US Dollar weakness. The pair, however, has reached the target of the previous two weeks' bullish flag formation, right above 1.1700, and needs further reasons to climb higher. Today, all eyes are on the US PCE Prices Index, which is likely to determine the pair's near-term direction. Until that moment, further sideways trading is expected.
On the downside, the pair is finding support at the 1.1680 intraday low ahead of the previous resistance, now a potential support area at 1.1630-1.1640 (June 24 and 25 highs).
Immediate resistance is at Thursday's high of 1.1745 and above here, the 161.8% Fibonacci extension of the June 10-12 rally at 1.1795.
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.
Artigos Recomendados
