Select Language

EUR/USD tumbles below 1.0800 on Trump's tariff plan

Breaking news

EUR/USD tumbles below 1.0800 on Trump's tariff plan

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2024.11.08 13:36
EUR/USD tumbles below 1.0800 on Trump's tariff plan

update 2024.11.08 13:36

  • EUR/USD depreciates to around 1.0780 in Friday's Asian session, down 0.20% on the day. 
  • Future Fed policy decisions are still data-dependent after a 25 bps rate cut on Thursday. 
  • Trump's proposals to raise tariffs and rising bets on ECB rate cuts exert some selling pressure on the Euro. 

The EUR/USD pair plunges to near 1.0780 amid the renewed US Dollar (USD) demand on Friday during the Asian trading hours. Also, Donald Trump's proposals to raise tariffs weigh on the Euro (EUR) against the Greenback. Traders await the advanced US Michigan Consumer Sentiment data for November for fresh impetus, along with the speech from the Federal Reserve (Fed) Michelle Bowman on Friday. 

As widely expected, the US Fed cut its key interest rate by 25 basis points (bps) at its November meeting on Thursday. The US central bank does not want to see any further weakening of the labor market and continues to expect that inflation will sustainably decline to the Fed's 2% target. Therefore, the Fed is expected to lower interest rates further at the next few meetings, but the timing remains uncertain as the Fed will continue assessing data to determine the "pace and destination" of interest rates.

Trump has vowed a 10% tariff on imports from all countries, exerting some selling pressure on the Euro as the European Union has the second-largest trade deficit with the United States globally and is the largest exporter to the US, per JPMorgan. 

Furthermore, the European Central Bank (ECB) is seen cutting rates at a faster pace than the Fed. This, in turn, could drag the shared currency lower against the Greenback. The ECB has already reduced rates three times this year as inflation risks in the Eurozone ease faster than expected. The rising expectation of another rate reduction continues to undermine the EUR in the near term. 

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.

 


Date

Created

 : 2024.11.08

Update

Last updated

 : 2024.11.08

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

Forex Today: Markets stabilize, investors assess Fed announcements in aftermath of Trump victory

Here is what you need to know on Friday, November 8: Following two days of highly volatile action, financial markets stay relatively quiet early Friday as investors digest the Federal Reserve's (Fed) policy announcements following Donald Trump's victory in the presidential election.
New
update2024.11.08 16:10

EUR/GBP Price Forecast: Extends downside, initial support level emerges below 0.8300

The EUR/GBP cross remains on the defensive around 0.8310 on Friday during the early European trading hours.
New
update2024.11.08 16:07

AUD/JPY drops to near 101.50 as Aussie struggles due to fears over Trump tariffs on China

AUD/JPY retraces its recent gains from the previous session, trading around 101.60 during the early European hours on Friday.
New
update2024.11.08 15:57

USD/CAD Price Forecast: Tests nine-day EMA close to 1.3900 within an ascending channel

The USD/CAD pair gains ground to near 1.3880 during the Asian trading session on Friday.
New
update2024.11.08 15:15

FX option expiries for Nov 8 NY cut

FX option expiries for Nov 8 NY cut at 10:00 Eastern Time, via DTCC, can be found below.
New
update2024.11.08 15:00

USD/CHF edges higher above 0.8700 amid renewed US Dollar demand

The USD/CHF pair drifts higher to around 0.8730 during the early European session on Friday.
New
update2024.11.08 14:52

EUR/JPY drops to two-week low around mid-164.00s, lacks follow-through selling

The EUR/JPY cross remains under some selling pressure for the second successive day and drops to a two-week low, around mid-164.00s during the Asian session on Friday.
New
update2024.11.08 14:16

Silver Price Forecast: XAG/USD falls toward $31.50 amid improved US Dollar, yields

Silver price (XAG/USD) loses ground to near $31.70 per troy ounce during the Asian hours on Friday.
New
update2024.11.08 14:09

India Gold price today: Gold falls, according to FXStreet data

Gold prices fell in India on Friday, according to data compiled by FXStreet.
New
update2024.11.08 13:36

EUR/USD tumbles below 1.0800 on Trump's tariff plan

The EUR/USD pair plunges to near 1.0780 amid the renewed US Dollar (USD) demand on Friday during the Asian trading hours.
New
update2024.11.08 13:35

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel