- The Euro is showing a mild bearish stance against the US Dollar as the US-China talks extend to a second day.
- Strong Eurozone investors’ Confidence and hawkish comments from ECB officials are supporting the Euro.
- The US Dollar keeps trading within recent ranges amid a lack of news from the trade negotiations.
EUR/USD is trading mildly lower on Tuesday. The pair eased to levels right below 1.1400 at the time of writing, still within the last few days’ range, with investors reluctant to place large directional bets as US and Chinese representatives continue to discuss trade issues.
Positive remarks from some officials, namely US President Donald Trump’s comments affirming that he is getting “good reports” from the meeting, are contributing to keeping market sentiment buoyed and have provided some support to the US Dollar (USD).
Traders, however, are likely to remain looking from the sidelines, awaiting news about concrete progress. The world’s two largest economies have gone into the meeting with a constructive attitude, aiming to revive the spirit of last month’s meeting in Switzerland, which led to a significant reduction in their reciprocal tariffs.
This time, however, thorny issues such as rare earths’ trade, restrictions on chips’ exports, or visas for students will force both parties to make sacrifices if they want to reach a deal. And this might take some time.
In the Eurozone, the Sentix Investors’ Confidence Index has shown a significant improvement in June, with the indicator jumping to positive levels for the first time in one year. Beyond that, ECB’s Olli Rehn and Francoise de Villeroy have reinforced the bank’s recent hawkish stance, and Italian Industrial Output advanced against expectations. All in all figures supportive for the Euro.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.31% | 0.64% | 0.14% | 0.18% | 0.32% | 0.21% | 0.13% | |
| EUR | -0.31% | 0.33% | -0.20% | -0.09% | 0.03% | -0.09% | -0.15% | |
| GBP | -0.64% | -0.33% | -0.58% | -0.42% | -0.31% | -0.42% | -0.47% | |
| JPY | -0.14% | 0.20% | 0.58% | 0.07% | 0.14% | -0.01% | -0.09% | |
| CAD | -0.18% | 0.09% | 0.42% | -0.07% | 0.12% | 0.00% | -0.05% | |
| AUD | -0.32% | -0.03% | 0.31% | -0.14% | -0.12% | -0.09% | -0.17% | |
| NZD | -0.21% | 0.09% | 0.42% | 0.00% | -0.01% | 0.09% | -0.06% | |
| CHF | -0.13% | 0.15% | 0.47% | 0.09% | 0.05% | 0.17% | 0.06% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: Lack of news leads to muted market movement
- The US Dollar is nudging higher against most peers, yet still constrained within the recent ranges. The US Dollar Index (DXY) has bounced up, but it is struggling to take a significant distance from the nearly two-month lows hit last week.
- The trade talks between US and Chinese representatives are set to resume on Tuesday at 9:00 GMT. Trump affirmed on Monday that he is “only getting good reports,” but that dealing with China is not easy. These comments feed hopes of a positive outcome, but risk appetite remains subdued.
- The Eurozone Sentix Confidence Index has improved to a 0.2% reading in June, up from a -8.1 in May and a -19.5 in April, beating expectations of a -6.0 reading. German economic expectations improved for the fourth consecutive month, although they remained in negative territory, while the sentiment about the Eurozone has improved by more than 30 points in the last two months.
- ECB’s Rehn stated that the bank should focus on keeping inflation steady at 2% and warned about complacency over the inflation outlook, dampening hopes about any potential interest rate cut in the coming months.
- In Italy, Industrial Production increased 1% in April, its best reading since February 2022, following a flat reading in March, and beating expectations of a 0.1% monthly increase.
- The highlight of the week will be Wednesday’s US Consumer Price Index (CPI), which is expected to have grown steadily at 0.2% in May with the yearly inflation increasing to 2.5% from 2.3% in April. Core inflation is also expected to have accelerated, endorsing the Fed’s hawkish stance.
- The Federal Reserve is on its blackout period ahead of next week’s monetary policy meeting. Futures markets are not pricing any rate cut at least until September, with nearly two rate cuts foreseen for this year, as data from the CME Group’s Fed Watch Tool shows.
Technical analysis: EUR/USD looks for direction above 1.1370
EUR/USD keeps moving within an upward trend, but the rejection at around 1.1500 seen last week and a bearish divergence on the 4-hour chart suggest that bulls might be losing steam.
Price action shows a mild negative tone on Tuesday, but sellers should break the 1.1370 support level to confirm a deeper correction heading to 1.1315 (May 30 low) and the 1.1215-1.1220 (May 20 and 28 lows).
On the upside, the June 3 high at 1.1455 is likely to challenge bulls ahead of the June 5 high at 1.1495.
German economy FAQs
The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany’s economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany’s economy strengthens, it can bolster the Euro’s value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro’s strength and perception in global markets.
Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009-12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the ‘Fiscal Compact’ following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.
Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.
German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond’s price, and it is therefore considered a more accurate reflection of return. A decline in the bund’s price raises the coupon as a percentage of the loan, resulting in a higher Yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.
The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the oversight of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).
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