- The Euro trades practically flat on the day with risk appetite fading.
- Fears of escalation in the Middle East conflict are providing support to the US Dollar.
- EUR/USD is moving within a small triangle pattern around 1.1550.
The EUR/USD pair is trading practically flat, halfway through the 1.1500 range on Tuesday. Waning hopes of a truce in the Middle East have dampened risk appetite, but market volatility remains contained so far as investors await a slew of monetary policy decisions, including the Federal Reserve’s (Fed) later this week.
Israel and Iran have continued exchanging fire for the fifth day, and US President Donald Trump has urged citizens to evacuate Tehran, before leaving the G7 summit one day earlier to meet with the National Security Council. Concerns that the US might get involved in the conflict have boosted risk aversion.
Nevertheless, market moves remain limited so far, with investors looking from the sidelines ahead of US Retail Sales data, due later on Tuesday, and the outcome of the Fed’s monetary policy meeting, on Wednesday.
The US central bank is widely expected to leave rates unchanged, but investors will be particularly attentive to the summary of economic projections and potential variations in the dot plot to asses the path of interest rates in the near term.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.05% | 0.11% | 0.03% | -0.03% | -0.23% | -0.27% | -0.13% | |
| EUR | -0.05% | 0.04% | 0.00% | -0.09% | -0.24% | -0.23% | -0.20% | |
| GBP | -0.11% | -0.04% | -0.10% | -0.14% | -0.29% | -0.32% | -0.24% | |
| JPY | -0.03% | 0.00% | 0.10% | -0.05% | -0.27% | -0.28% | -0.18% | |
| CAD | 0.03% | 0.09% | 0.14% | 0.05% | -0.27% | -0.16% | -0.10% | |
| AUD | 0.23% | 0.24% | 0.29% | 0.27% | 0.27% | 0.00% | 0.05% | |
| NZD | 0.27% | 0.23% | 0.32% | 0.28% | 0.16% | -0.00% | 0.05% | |
| CHF | 0.13% | 0.20% | 0.24% | 0.18% | 0.10% | -0.05% | -0.05% |
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 US Dollar recovers its safe-haven status
- Trump’s hasty exit from the G7 summit has boosted concerns that the US might get involved in the Israel-Iran conflict. The news has crushed investors’ appetite for risk and provided some support to the US Dollar on higher demand for safe assets.
- Israel and Iran continued exchanging missiles before that. Iran vowed to launch its largest missile attack in history at Israel, while Israeli Prime Minister Benjamin Netanyahu threatened to kill Iran’s Supreme Leader, Ali Khamenei. In the meantime, Trump’s call to Tehran citizens to leave the city has fuelled concerns of a serious escalation of the conflict.
- The market reaction has been risk-averse, yet with limited volatility so far. Traders are in a wait-and-see mode, awaiting the Fed interest rate decision later in the week. The US Dollar Index (DXY), which measures the value of the USD against a basket of the most-traded currencies, is moving right above the 98.00 level, not far from last week’s multi-year lows.
- In the macroeconomic front, the focus on Tuesday will be on the US Retail Sales data, which are expected to show a significant 0.7% contraction in May after a 0.1% growth in April, showing further evidence of the negative impact of the tariff turmoil in the US economy.
- In the European session, the ZEW Economic Sentiment Survey is expected to show a minor improvement in June, although the impact on the Euro is likely to be subdued, with geopolitical tensions front and center in the market.
- The highlight of the week will be the Federal Reserve’s monetary policy decision on Wednesday. The bank will, most probably, leave its benchmark interest rate unchanged at the current 4.25%-4.5% range, but investors will be looking for changes in the interest rate projections, which pointed to two more rate cuts this year, and the growth and inflation forecasts.
- US data released on Monday revealed a sharp deterioration of the NY Fed Manufacturing Index, which fell to a reading of -16 in June, against expectations of a moderate improvement to -5.5 from -9.2 in May.
Technical analysis: EUR/USD forming a small triangle around 1.1550
EUR/USD has been moving within an ever-tightening range since peaking above 1.1600 last week, forming a small triangle. Technical studies say that this is a continuation pattern, suggesting a bullish outcome.
The top of the triangle, now around 1.1600, is likely to hold bulls ahead of the June 12 high at 1.1630. Above here, the 1.1700 psychological level might attract sellers. The triangle pattern’s measured target is at 1.1750.
On the downside, the triangle bottom is at 1.1525 ahead of the June 13 low at around 1.1490. Below here, the bullish trend would be called into question, with pressure increasing towards 1.1370 (June 6 and 10 lows).
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.