Learn how the EUR/USD pair is affected by increased risk aversion and US economic data, and what it means for investors.
- EUR/USD declines due to increased risk aversion ahead of the ISM PMI release on Thursday.
- The US Dollar recovers intraday losses as Treasury yields rebound from multi-month lows.
- The downside of the Euro could be limited as the latest inflation data raised doubt on potential ECB rate cuts.
EUR/USD depreciates to near 1.0790 during the European session on Thursday. This decline is attributed to the improved US Dollar (USD) due to a recovery in US Treasury yields ahead of US key economic data including ISM Manufacturing PMI and weekly Initial Jobless Claims, both set to be released later in the North American session.
However, the US Dollar faced challenges due to the dovish sentiment surrounding the Federal Reserve’s (Fed) policy trajectory. Fed decided to keep rates unchanged in the 5.25%-5.50% range at its July meeting on Wednesday.
During a press conference post-interest rate decision, Federal Reserve Chair Jerome Powell stated that a rate cut in September is “on the table,” while the Federal Open Market Committee (FOMC) did not want to commit to anything in the statement. Powell added that the central bank will closely monitor the labor market and remain vigilant for signs of a potential sharp downturn, per Reuters.
Across the pond, HCOB Eurozone Manufacturing Purchasing Managers Index (PMI) posted a reading of 45.8 for July, slightly above the expected and prior readings of 45.6, data showed on Thursday. Moreover, on Wednesday, the Harmonised Index of Consumer Prices (HICP) in the Eurozone rose by 2.6% YoY in July, compared to 2.5% in the previous month. This figure exceeded the estimation of 2.4%.
The latest inflation report in the eurozone raised doubt on potential European Central Bank (ECB) interest rate cuts in September. The Euro may attract some buyers due to the diminished odds of the ECB cutting interest rates at its meeting on September 14.
Euro PRICE Today
Check the percentage change of Euro (EUR) against major currencies today and understand market trends.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.38% | 0.56% | -0.28% | 0.18% | 0.37% | 0.13% | -0.27% |
Euro FAQs
Get answers to frequently asked questions about the Euro and how it impacts the global economy.
In conclusion, the EUR/USD pair is influenced by various factors such as US economic data, Federal Reserve policies, Eurozone inflation reports, and ECB interest rate decisions. Investors should closely monitor these developments to make informed decisions in the forex market. Understanding these dynamics can help individuals manage their finances effectively and capitalize on potential opportunities in the ever-changing world of currency trading.