- EUR/USD is retracing previous losses after dropping to 1.1213 lows.
- A US court decision to block trade tariffs sent the US Dollar rallying during the Asian session.
- In Europe, weak macroeconomic data keeps acting as a headwind for the Euro recovery.
EUR/USD is trading with moderate losses, around 1.1275 at the time of writing, after bouncing up from 1.1213 lows. A sentence by a US court ruling against trade tariffs rattled markets during the Asian session, sending the US Dollar (USD) to its highest levels in the last ten days.
The three judges from the US Court of International Trade have voted unanimously against US President Donald Trump’s sweeping trade tariffs, as they consider that the exclusive authority to regulate commerce resides with Congress.
The news has boosted risk appetite, triggering significant rallies on the US Dollar and sending Asian Stock markets higher. Eurozone and Wall Street futures are also pointing to a positive opening.
Investors have welcomed the court ruling. Trump’s tariffs had fuelled concerns that higher inflationary pressures and a weaker economic outlook would pose a headache to the Federal Reserve (Fed), as the minutes of the last monetary policy meeting revealed.
The US Government, however, appealed the sentence quickly, which suggests that a lengthy process will follow. This might halt the relief rally at some point, but so far, the positive market mood has reversed the “Sell America” trade.
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 | 0.13% | 0.03% | 0.28% | -0.13% | -0.35% | 0.02% | 0.34% | |
| EUR | -0.13% | -0.09% | 0.13% | -0.26% | -0.42% | -0.12% | 0.19% | |
| GBP | -0.03% | 0.09% | 0.23% | -0.16% | -0.31% | -0.04% | 0.20% | |
| JPY | -0.28% | -0.13% | -0.23% | -0.42% | -0.64% | -0.30% | -0.05% | |
| CAD | 0.13% | 0.26% | 0.16% | 0.42% | -0.26% | 0.15% | 0.35% | |
| AUD | 0.35% | 0.42% | 0.31% | 0.64% | 0.26% | 0.30% | 0.51% | |
| NZD | -0.02% | 0.12% | 0.04% | 0.30% | -0.15% | -0.30% | 0.20% | |
| CHF | -0.34% | -0.19% | -0.20% | 0.05% | -0.35% | -0.51% | -0.20% |
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 Dollar jumps as a US court blocks trade tariffs
- The US Court of International Trade has invalidated with immediate effect Trump’s “Liberation Day” tariffs and instructed the administration to issue orders reflecting the ruling within the next ten days. The government appealed the sentence, questioning the court’s authority.
- The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, has returned above the 100.00 psychological level and is trading about 1.8% above last week’s lows.
- The news on levies has also prompted investors to pare back Fed easing hopes. Futures markets are now pricing an average of 42 basis points of interest rate cuts this year, down from 50 earlier this week.
- On Wednesday, the Minutes of the last Federal Reserve meeting reflected the central bank’s concerns about the risks of stagflation. Such a scenario would force the Fed to prioritize one of its two mandates: promoting employment or fighting inflation, which would deteriorate investors’ confidence in the US Dollar and other US assets.
- Eurozone macroeconomic data failed to inspire on Wednesday. German Unemployment Rate remained steady at 6.3% despite a higher-than-expected increase in layoffs. France’s Nonfarm Payrolls declined to -0.1% against expectations of 0%, and Consumer Spending rose well below forecasts, 0.3% against 0.8%.
- In the US calendar today, the second estimation of the first quarter’s GDP and several Fed speakers will provide some fundamental background for the US Dollar ahead of Friday’s all-important Personal Consumption (PCE) Price Index release.
Technical analysis: EUR/USD is on a negative trend, with support at 1.1215 in play
EUR/USD is going through a bearish correction after last week’s impulsive rally. The pair broke and confirmed below the ascending channel’s bottom, before finding some support at the May 20 low at 1.1215.
Price action is showing a mild recovery, yet with technical indicators well within bearish territory on the 4-hour chart. Upside attempts are likely to be challenged at a previous intraday support in the 1.1285 area and the reverse trendline, now at 1.1315.
Below the mentioned 1.1215 support area, the next targets are 1.1130 (May 16 low) and 1.1065 (May 12 low).
EUR/USD 4-Hour Chart
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.