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: 2025.07.03
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EUR/USD trades around 1.1800, upside appears amid rising odds of Fed rate cuts
World FX news
Breaking news
EUR/USD trades around 1.1800, upside appears amid rising odds of Fed rate cuts
New
2025.07.03 12:40
2025.07.03 12:40
2025.07.03 12:40
- EUR/USD may appreciate as the US Dollar struggles due to rising expectations the Fed cutting interest rates.
- US ADP Employment Change fell by 33,000 in June, against the downwardly revised 29,000 gain in May.
- ECB policymaker Pierre Wunsch said, "I am not uncomfortable with the market's interest rate expectations."
EUR/USD remains subdued for the second successive session, trading around 1.1800 during the Asian hours on Thursday. The pair may regain its ground as the US Dollar (USD) loses ground amid rising expectations that the Federal Reserve (Fed) will cut interest rates, driven by the downbeat ADP national employment report.
US ADP Employment Change fell for the first time in more than two years in June. The private-sector payrolls decreased by 33,000 in June after a downwardly revised 29,000 gain in May. This figure came in below the market consensus of 95,000.
Traders await highly anticipated labor market data, including US Nonfarm Payrolls (NFP) and Average Hourly Earnings, due later in the day. Moreover, ISM Services PMI and S&P Global US PMI will also be eyed on Thursday.
Latest remarks from several European Central Bank (ECB) officials on the ECB forum highlighted increasing concern over the Euro's (EUR) strength and its potential dampening effect on inflation.
ECB policymaker Pierre Wunsch said on Wednesday that "I am not uncomfortable with the market's interest rate expectations." "There is an argument for providing a mildly supportive policy stance," Wunsch added. Meanwhile, ECB member Olli Rehn said, "ECB should be mindful of the risk that inflation stays persistently below 2% target." Rehn noted that the "joint European borrowing to finance defence could bolster the Euro's role by creating a new safe asset."
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.
Last updated
: 2025.07.03
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GBP/USD: Likely to trade between 1.3585 and 1.3705 - UOB Group
Pound Sterling (GBP) is likely to trade in a range, probably between 1.3585 and 1.3705. In the longer run, week-long positive outlook has been negated; for a continued down-move, GBP must first close below 1.3560, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
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2025.07.03 18:40USD/CHF upside attempts remain limited below 0.7945 ahead of the US NFP report
The US Dollar is trading with marginal gains for the second consecutive day on Thursday, but it seems unable to put any significant distance from the 14-year lows hit earlier this week, with price action limited below 0.7945.Earlier on Thursday, Switzerland's Consumer Price Index data revealed an un
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2025.07.03 18:38USD: Too early to say we've reached 'peak bearishness' on the USD - ING
While forecasters are overwhelmingly bearish on the dollar now - and some are bearish on a multi-quarter basis too - one possible shoe still to drop is the possibility of early Fed rate cuts, ING's FX analyst Francesco Pesole notes.
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2025.07.03 18:31Silver price today: Silver rises, according to FXStreet data
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2025.07.03 18:30AUD/JPY treads water above 94.50 due to signs of BoJ delaying rate hikes
AUD/JPY holds its positions for the second successive session, trading around 94.60 during the European hours on Thursday. The currency cross gains ground as the Japanese Yen (JPY) faces challenges, driven by the Bank of Japan (BoJ) adopting caution on interest rate hikes.
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2025.07.03 18:09EUR/GBP eyes 0.8735 after breakout - Société Générale
EUR/GBP is extending its uptrend after defending the 200-DMA in May and breaking above recent consolidation, with momentum indicators pointing higher. The pair eyes the April high at 0.8735 and projections near 0.8780, while support rests at 0.8585/0.8575, Société Générale's FX analysts note.
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2025.07.03 18:00Central bank Gold buying recovers in May - ING
Central banks added a net 20 tonnes of Gold to global Gold reserves in May, ING's commodity experts Ewa Manthey and Warren Patterson note.
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2025.07.03 17:56GBP: Political noise takes its toll - ING
There was a surprisingly large sell-off in sterling yesterday after markets bought into the view that the fiscally responsible Chancellor, Rachel Reeves, could be forced to resign.
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2025.07.03 17:54GBP/USD: Corrective pullback underway - OCBC
Pound Sterling (GBP) fell, alongside Gilts on signs of division within Labour party. GBP was last at 1.3671 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.
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2025.07.03 17:42OPEC+ expected to go with another large supply hike - ING
Oil prices moved higher yesterday, with ICE Brent settling just shy of a 3% gain on the day, ING's commodity experts Ewa Manthey and Warren Patterson note.
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2025.07.03 17:40Disclaimer:
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