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- EUR/USD concludes the trading week at familiar technical levels near 1.0700.
- German data broadly failed to meet expectations early Friday morning.
- US PCE inflation met expectations, but the good mood was brief.
EUR/USD It turned sideways on Friday, ending a flat trading week after fiber traders found good reason to push the pair meaningfully in either direction. German import prices and employment numbers widely miss the American figure Consumption Expenses The Consumer Price Index (PCE) failed to spark significant demand despite printing at expectations.
The rate of change in German unemployment was higher than expected, showing that 19,000 German consumers were added to the unemployment figures in June. This is more than the forecast of 15,000, but still below the 25,000 in the previous month. The German unemployment rate also rose to 6.0% versus expectations of 5.9%.
Predicting the next week: Data, Policy and the ECB Forum take center stage
On the US side, core PCE inflation declined for the year ending in May, falling to 2.6% from the previous 2.8%. While the decline in headline inflation readings would be a welcome addition to the latest inflation data, it failed to spark real risk appetite in investors, as the number was nowhere near enough to drive inflation. Federal Reserve (The US Federal Reserve) is moving to accelerate the pace of interest rate cuts.
Personal income in the United States rose by 0.5% on a monthly basis in May compared to expectations of 0.4% and the previous 0.3%, but personal spending in the United States came in at 0.2% versus expectations of 0.3%, and the previous version saw a slight downward revision to 0.1% from the initial 0.2%. .
The University of Michigan consumer sentiment index rose to 68.2 in June, up from 65.6 previously and beating expectations of 65.8. However, the University of Michigan consumer inflation expectations over five years fell to 3.0% in June, down from 3.1% previously, but inflation expectations remain well above the Federal Reserve’s inflation target of 2% annually.
Next week, European inflation figures will hit the markets early in the week with the German HICP figures due on Monday, followed by the EU-wide HICP on Tuesday. Next week will also see the release of the next US inflation data. Non-farm payrolls (NFP) Employment data is due out next Friday.
Technical Forecast for EUR/USD
The cryptocurrency hit technical barriers on Friday, taking on the 200-hour exponential moving average (EMA) resistance at 1.0715. The pair continues its battle at 1.0700, with the bulls failing to establish a near-term pattern of lower highs so far.
EUR/USD daily candlesticks continue to form a rough consolidation pattern as the pair struggles on the low side of the 200-day EMA at 1.0788. As buyers continue to show signs of exhaustion, a downward breakout to the 2024 bidding low at 1.0600 becomes increasingly likely.
EUR/USD Hourly Chart
EUR/USD Daily Chart
Frequently asked questions about the euro
The euro is the currency used in the twenty member states of the European Union that belong to the eurozone. It is the second most traded currency in the world after the US dollar. In 2022, it will reach 1.2 trillion euros. It has been calculated. For 31% of all foreign exchange transactions, with an average daily trading volume of over $2.2 trillion per day. The EUR/USD currency pair is the most traded currency pair in the world. accounting With an estimated discount of 30% on 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 of the eurozone. The ECB sets interest rates and conducts monetary policy. The ECB’s primary mission is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is to raise or lower interest rates. Relatively high interest rates—or the expectation of higher interest rates—are generally good for the euro and vice versa. The Governing Council of the ECB makes monetary policy decisions at meetings held eight times a year. The decisions are made by the heads of the eurozone’s 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 economic indicator for the euro. If inflation rises more than expected, especially if it is above the European Central Bank’s 2% target, the ECB will be forced to raise interest rates to bring it back under control. Relatively high interest rates compared to their peers are usually good for the euro, as they make the region more attractive as a place for global investors to park their money.
Data releases measure the health of the economy and can influence the euro. Indicators such as GDP, manufacturing and services PMIs, employment, and consumer confidence 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, it may encourage the European Central Bank to raise interest rates, which will directly boost the euro. Otherwise, if economic data is weak, the euro is likely to fall. Economic data from the four largest economies in the eurozone (Germany, France, Italy, and Spain) is of particular importance, as they account for 75% of the eurozone economy.
Another important data 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 during a certain period. If a country produces highly desirable exports, its currency will gain value from the additional demand generated by foreign buyers seeking to purchase these goods. Therefore, a positive net trade balance strengthens the currency and vice versa for a negative balance.
