- The Euro depreciates further as Trump’s new Tariff salvo hammered risk appetite.
- US Jobless Claims drop unexpectedly, dampening hopes of Fed interest-rate cuts in the coming months.
- EUR/USD keeps trading lower, with bears looking at the 1.1660 support area.
The EUR/USD pair is trading lower for the third consecutive day on Friday, with risk appetite subdued after the US President Donald Trump announced that the European Union (EU) will be included in the next batch of tariff letters and raised blanket levies for all other countries to 15% or 20% from the previous 10%.
The Euro (EUR) has bounced up from intra-day lows at 1.1670 against the US Dollar (USD) but remains below the 1.1700 level ahead of the US market opening, on track for a 0.75% weekly decline. From a longer-term perspective, the EUR/USD extends its corrective pullback from the long-term highs reached on July 1.
Trump rattled markets again, this time in a TV interview, announcing a new round of tariffs for a batch of US partners, and that the European Union will be among them this time. These comments cast doubts about the progress of the trade talks between both parties, but EU officials remain positive about the chances of reaching a deal before the August 1 deadline.
In the macroeconomic front, data from the US released on Thursday showed that initial claims for unemployment benefits fell unexpectedly in the first week of June, adding to evidence of a resilient labour market and giving an additional impulse to the US Dollar.
The calendar today is fairly light, with speeches from European Central Bank (ECB) officials Fabio Panetta and Piero Cipollone, and Current Account figures from Germany during the European morning. In the US, the WASDE agricultural report and the monthly budget statement are unlikely to trigger significant volatility.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.10% | 0.44% | 0.48% | 0.26% | -0.02% | 0.28% | -0.07% | |
| EUR | -0.10% | 0.34% | 0.38% | 0.15% | -0.04% | 0.17% | -0.16% | |
| GBP | -0.44% | -0.34% | 0.06% | -0.19% | -0.36% | -0.11% | -0.52% | |
| JPY | -0.48% | -0.38% | -0.06% | -0.22% | -0.50% | -0.22% | -0.56% | |
| CAD | -0.26% | -0.15% | 0.19% | 0.22% | -0.22% | 0.01% | -0.33% | |
| AUD | 0.02% | 0.04% | 0.36% | 0.50% | 0.22% | 0.36% | -0.13% | |
| NZD | -0.28% | -0.17% | 0.11% | 0.22% | -0.01% | -0.36% | -0.39% | |
| CHF | 0.07% | 0.16% | 0.52% | 0.56% | 0.33% | 0.13% | 0.39% |
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: Strong employment data provides additional support to the USD
- The US Dollar rallied further on Thursday after the US Weekly Jobless Claims dropped to a seven-week low. Initial claims dropped by 6,000 to 227,000 against expectations of a 2,000 increase to 235,000 from the 233,000 claims seen a week earlier.
- Claims data dampened hopes of Fed cuts in the coming months and pushed US Treasury yields somewhat higher, bringing the US Dollar higher with them. The CME Watch tool shows less than 5% chances of a rate cut in July and about 65% chances of at least 25 basis points (bps) cut in September, down from 6% and 72%, respectively, a day ago.
- Later on Thursday, Fed Governor Christopher Waller reiterated that the bank’s monetary policy is too restrictive and called for a rate cut in July as, he said, inflation from tariffs will be temporary.
- Likewise, San Francisco Fed President Mary Daly affirmed that the impact of tariffs on consumer prices will be muted and forecasted two interest rate cuts before the end of the year.
- On the other side of the Fed spectre, St. Louis Fed President Alberto Musalem said that it is still too early to assess whether the impact of tariffs will be a one-time boost or longer-lasting, highlighting the divergences within the US central bank’s Monetary Policy Committee.
- European Central Bank officials have also shown some divergence. Board Member Fabio Panetta affirmed that the bank should ease monetary policy further if weak growth weighs on prices, while Isabel Schnabel discarded further rate cuts unless there is a significant deviation of inflationary trends.
- Earlier on Friday, France’s Consumer Prices Index (CPI) confirmed that inflation grew at a 0.4% pace in June compared with the previous month, while the yearly rate was revised up to a 0.9% rate, from the previously estimated 0.8%
- In Germany, data released by Destatis on Thursday confirmed preliminary figures showing that consumer inflation eased to the ECB’s 2% year-on-year target rate in June, while monthly inflation stagnated.
EUR/USD keeps trading lower within the corrective channel
EUR/USD continues trading in a succession of lower highs and lower lows, in a bearish correction after peaking at 1.1830 on July 1. Price action remains trapped within a broadening wedge pattern, with the support level between Thursday’s low, at 1.1660, and the channel’s bottom, at 1.1650, holding bears for now.
Technical indicators are pointing lower, with the 4-hour Relative Strength Index (RSI 14) well below the 50 level but still far from oversold territory, suggesting that further depreciation is likely. Below here, the pair might find support at the 1.1640-1.1630 area, where the 50% Fibonacci retracement of the late June rally meets the June 12, 24, and 25 highs.
On the upside, the intra-day high, at 1.1710, and the area between the channel resistance at 1.1740 and Thursday’s high at 1.1750 are likely to limit upside attempts.
Risk sentiment FAQs
In the world of financial jargon the two widely used terms “risk-on” and “risk off” refer to the level of risk that investors are willing to stomach during the period referenced. In a “risk-on” market, investors are optimistic about the future and more willing to buy risky assets. In a “risk-off” market investors start to ‘play it safe’ because they are worried about the future, and therefore buy less risky assets that are more certain of bringing a return, even if it is relatively modest.
Typically, during periods of “risk-on”, stock markets will rise, most commodities – except Gold – will also gain in value, since they benefit from a positive growth outlook. The currencies of nations that are heavy commodity exporters strengthen because of increased demand, and Cryptocurrencies rise. In a “risk-off” market, Bonds go up – especially major government Bonds – Gold shines, and safe-haven currencies such as the Japanese Yen, Swiss Franc and US Dollar all benefit.
The Australian Dollar (AUD), the Canadian Dollar (CAD), the New Zealand Dollar (NZD) and minor FX like the Ruble (RUB) and the South African Rand (ZAR), all tend to rise in markets that are “risk-on”. This is because the economies of these currencies are heavily reliant on commodity exports for growth, and commodities tend to rise in price during risk-on periods. This is because investors foresee greater demand for raw materials in the future due to heightened economic activity.
The major currencies that tend to rise during periods of “risk-off” are the US Dollar (USD), the Japanese Yen (JPY) and the Swiss Franc (CHF). The US Dollar, because it is the world’s reserve currency, and because in times of crisis investors buy US government debt, which is seen as safe because the largest economy in the world is unlikely to default. The Yen, from increased demand for Japanese government bonds, because a high proportion are held by domestic investors who are unlikely to dump them – even in a crisis. The Swiss Franc, because strict Swiss banking laws offer investors enhanced capital protection.
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