Select Language

Portfolio

Share your portfolio and performance in real time
Events & contests

Events and contests held by retail brokers around the world

EUR/USD trims losses but still sheds weight

World FX news

Home

Breaking news

EUR/USD trims losses but still sheds weight

New

2025.02.04 08:44

EUR/USD trims losses but still sheds weight

2025.02.04 08:44

EUR/USD dropped after markets weighed sweeping US tariffs.
Markets recovered ground after 30-day tariff extensions on Mexico and Canada.
Fiber remains bearish after Trump teased tariffs on EU.

EUR/USD dropped sharply following fresh tariff threats from US President Donald Trump, impacting the markets. However, significant declines in global risk markets eased as the Trump administration offered 30-day concessions on impending tariffs for Canada and Mexico. The likelihood of US tariffs specifically targeting the EU remain on the table, but details from President Trump remain thin.

Markets went full-circle to kick off the new trading week, with risk appetite plummeting after the US looked set to impose sweeping tariffs on some of its closest allies on Tuesday. A last minute stay of imposing stiff import fees on the US' own constituents helped alleviate bearish pressure underpinning markets for the time being, and investor sentiment has recovered roughly to where it started.

European economic data remains this this week, though pan-EU Retail Sales are expected to jump back to 2.0% on Thursday. Another US Nonfarm Payrolls (NFP) print also looms ahead on Friday. Jobs figures are unlikely to move the needle too much this week. The US labor segment remains sturdy, and geopolitical headlines are taking the front seat this week.

EUR/USD price forecast

Despite an intraday bullish recovery, the Euro still chalked in a sixth consecutive session of declines against the Greenback, sending EUR/USD within a stone's throw of the 1.0200 handle. Bids recovered back above 1.0300, but the pair still remains firmly planted in bear country south of the 50-day Exponential Moving Average (EMA) near 1.0450.

EUR/USD daily chart

Euro FAQs

What is the Euro?

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%).

What is the ECB and how does it impact the Euro?

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.

How does inflation data impact the value of the Euro?

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.

How does economic data influence the value of the Euro?

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.

How does the Trade Balance impact the Euro?

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.

Created

: 2025.02.04

Last updated

: 2025.02.04

BoJ's Ueda: Central bank is aiming to achieve 2% inflation, as measured by overall CPI
12 minutes ago
Australian Dollar holds gains as Trump delays tariffs on Canada, Mexico
2025.02.04 10:31
Japanese Yen weakens amid fading safe-haven demand after Trump delays tariffs
2025.02.04 10:23
White House unveils plan to set up sovereign wealth fund
2025.02.04 09:52
NZD/USD rebounds above 0.5600, all eyes turn to Trump's China tariff
2025.02.04 09:07
EUR/USD trims losses but still sheds weight
2025.02.04 08:43

Writer

FXStreet

Financial media

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?

Yes

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.

Send

Thank you for your feedback.

GBP/USD whipsaws as tariffs come and go

NZD/USD rebounds above 0.5600, all eyes turn to Trump's China tariff

Most viewed

BoJ's Ueda: Central bank is aiming to achieve 2% inflation, as measured by overall CPI

Bank of Japan (BoJ) Governor Kazuo Ueda told the Japanese parliament on Tuesday that the "BoJ is aiming to achieve 2% inflation, as measured by overall CPI, on a sustainable basis." Additional quotes Trend inflation refers to price moves excluding one-off factors.

New

2025.02.04 11:51

Disclaimer:

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.

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