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EUR/USD trades near 1.1350, stays silent as US Dollar seeks to recover stability

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EUR/USD trades near 1.1350, stays silent as US Dollar seeks to recover stability

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New update 2025.04.15 13:31
EUR/USD trades near 1.1350, stays silent as US Dollar seeks to recover stability

update 2025.04.15 13:31

  • EUR/USD holds steady as the US Dollar tries to stabilize amid rising stagflation concerns.
  • Fed's Bostic noted that the US central bank still faces a long path to reach its 2% inflation goal.
  • The ECB is widely anticipated to deliver a 25 basis point interest rate cut on Thursday.

EUR/USD continues to slide for the second consecutive session, trading near 1.1350 during Asian hours on Tuesday. The pair weakens as the US Dollar (USD) attempts to regain stability amid growing concerns over stagflation.

In early hours on Tuesday, Atlanta Fed President Raphael Bostic commented that the Federal Reserve still faces a long journey to bring inflation down to its 2% target. His remarks tempered market expectations for further interest rate cuts in the near term.

In a shift from its earlier outlook, Deutsche Bank now anticipates a 25 basis point rate cut in December--its first forecasted cut for 2025--followed by two additional cuts in the first quarter of 2026. The bank projects a terminal rate between 3.5% and 3.75%.

Market participants are now eyeing the European Central Bank's (ECB) Bank Lending Survey (BLS), which may offer key insights into the ECB's assessment of monetary and economic conditions ahead of its policy meeting on Thursday. The European Central Bank (ECB) is set to hold its policy meeting on Thursday, with markets widely anticipating a 25 basis point interest rate cut.

The Euro has also found support amid escalating global trade tensions and uncertainty surrounding US tariff policies, which have reignited fears of a potential recession and undermined investor confidence in US assets.

Investors will closely watch for ECB commentary on the implications of trade tensions for the Eurozone economy and the future trajectory of interest rates.

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

 : 2025.04.15

Update

Last updated

 : 2025.04.15

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