Select Language

EUR/USD hovers below 1.1400 as Eurozone inflation falls below ECB's 2% target

Breaking news

EUR/USD hovers below 1.1400 as Eurozone inflation falls below ECB's 2% target

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.06.04 13:05
EUR/USD hovers below 1.1400 as Eurozone inflation falls below ECB's 2% target

update 2025.06.04 13:05

  • EUR/USD maintains its position as the US Dollar depreciates due to US economic uncertainty.
  • JOLTS Job Openings reported 7.39 million jobs in April, which surprisingly came higher than the expected 7.1 million.
  • The Eurozone Harmonized Index of Consumer Prices declined 1.9% YoY in May, below the ECB's 2% target.

EUR/USD moves little after registering losses in the previous session, trading around 1.1380 during the Asian hours on Wednesday. The pair may appreciate as the US Dollar (USD) struggles due to traders' caution amid rising tariff uncertainty and its potential to hurt growth in the US economy.

Job Openings and Labor Turnover Survey (JOLTS) Job Openings posted 7.39 million new positions in April, higher than March's 7.2 million openings. This figure surprisingly came in above the market expectation of 7.1 million.

Traders await the US Nonfarm Payrolls (NFP) report for May, which is expected to show 130K job additions. If the report showed a stronger-than-expected outcome, this might lift the Greenback and put downward pressure on the EUR/USD pair.

US Treasury Secretary Scott Bessent said on Sunday that Trump and Xi Jinping were expected to meet soon to resolve trade disputes. China's Ministry of Commerce said on Monday that China had complied with the agreement by cancelling or suspending relevant tariff and non-tariff measures aimed at the US "reciprocal tariffs." Last week, US President Donald Trump accused China of breaching a truce on tariffs reached earlier this month.

The Eurozone Harmonized Index of Consumer Prices (HICP) fell by 1.9% year-over-year in May, below the ECB's 2% target for the first time in eight months. Core HICP, excluding volatile items, declined by 2.3% YoY, down from 2.7% in the previous month.

As the HICP May's inflation falling below the European Central Bank's (ECB) target, it reinforces expectations that the central bank might cut rates this week. Financial markets had fully priced in the odds of the ECB reducing its Deposit Facility Rate by 25 basis points (bps) to 2% at the upcoming monetary policy meeting.

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

 : 2025.06.04

Update

Last updated

 : 2025.06.04

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

GBP/USD continues to find fresh highs as Greenback withers

GBP/USD tested its highest bids in over three years on Thursday, briefly climbing above the 1.3600 handle in intraday trading for the first time in 40 months.
New
update2025.06.06 08:06

NZD/JPY Price Forecast: Climbs on eased US-China tensions

NZD/JPY climbed over 0.75% on Thursday amid a session that witnessed an escalation of the Trump-Musk fight on social media, which ultimately sent Testla (TSLA) stocks plunging over 14% during the day.
New
update2025.06.06 07:38

AUD/JPY Price Forecast: Rallies above 93.00 on risk appetite, as bullish engulfing pattern looms

The AUD/JPY prolonged its gains on Thursday and edged up over 0.76% amid a risk-on impulse sparked by news that the US and China might reach an agreement as President Trump spoke with China's President Xi Jinping during the day. At the time of writing the cross-pair trades at 93.30.
New
update2025.06.06 07:09

Canadian Dollar continues to gain ground, but momentum is fizzling

The Canadian Dollar (CAD) tested fresh eight-month peaks against the US Dollar (USD) on Thursday.
New
update2025.06.06 05:02

Mexican Peso strengthens ahead of Friday's NFP data, with US-Mexico relations in focus

The Mexican Peso (MXN) is on track to extend its winning streak for a second consecutive session against the US Dollar (USD) on Thursday. 
New
update2025.06.06 04:39

WTI Price Forecast: WTI Crude Oil holds gains above $62, momentum builds for further upside

West Texas Intermediate (WTI) crude oil extends its recovery on Thursday, building on early week gains as bulls capitalize on a bullish flag breakout. At the time of writing, WTI is trading around $62.80, up nearly 1.20% on the day, and just below the intraday high of $63.30.
New
update2025.06.06 04:10

Forex Today: Could Nonfarm Payroll figures save the US Dollar?

The Greenback bounced off its weekly lows of 98.35 as China's media reported a call between US President Donald Trump and China's President Xi Jinping. Both parties mentioned the call was good and focused on trade policies and rare earths.
New
update2025.06.06 04:01

EUR/USD holds above 1.1440 as ECB cuts rates; focus shifts to US NFP data

EUR/USD holds onto earlier gains of over 0.20% after the European Central Bank (ECB) grabbed the headlines, reducing rates but leaving the door open for a pause at the upcoming July 24 meeting. At the time of writing, the pair trades at 1.1441 after bouncing off daily lows of 1.1404.
New
update2025.06.06 03:59

Fed's Schmid: I expect tariffs to start to show through to prices in the coming months

Federal Reserve (Fed) Bank of Kansas City President Jeff Schmid took a slightly different approach to other Fed officials who also spoke on Thursday, but still remains focused on the overall difficulty of manipulating Fed policy rates in an uneasy post-tariff environment.
New
update2025.06.06 02:55

Fed's Harker: Amid uncertainty, the Fed must wait and see on next policy steps

Federal Reserve (Fed) Bank of Philadelphia President Patrick Harker added his own perspective to comments from other Fed officials earlier in the day, noting that whiplash trade policies from the Trump administration are making it difficult for Fed officials to move on policy rates.
New
update2025.06.06 02:52

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