- The euro speeds up its decline on Monday because investors analyze the details of the EU-USA business agreement.
- The euro area products face 15% of the tariff in exchange for strong EU investments and large shopping of energy and military equipment from the US.
- The US dollar maintains a slight positive tone because US data supports Hawkish’s attitude of the Fed.
It was to buy a reputation, sell a reality for a couple eur/USDwho accelerated his reversal from last week’s minimum at Monday’s European meeting. The report that the European Union (EU) has finally signed a trade agreement with the United States (USA) has not provided any significant EURO (EUR) support, while the US dollar (USD) extends its recovery as investors of orthoses for Hawkish Fed.
So far, the general currency has dropped about 120 pips on Monday and is on the way for the worst daily performance in the months. The pair was rejected at 1.1770 on timely trading and trades to 1.1650 before the start of the US session, with technical indicators deep on the Bearish territory.
The President of the European Commission Ursula von der Leyen signed a pact with US President Donald Trump, who will reduce tariffs to 15%, half of the 30% rate announced by Trump earlier in July. In exchange, Euro area has undertook to invest EUR 600 billion in the US and increase the purchases of gas and military equipment.
The agreement was unable to change the recent balance of power between the euro and the US dollar, with the latest supported relatively positive American data that supports the federal reserve (feeding) to wait and see the attitude and virtually discard any interest rate after the monetary policy decision this week.
Economic calendar It is today thin, only with the Dallas Fed Index, which provides some basic instructions during the American meeting. Investors are likely to remain calm before the busier second half of the week, with the center Federal reserve Decisions and Friday’s Payout Lilies (NFP) for July attract focus.
Euro price today
The table below shows the percentage change in Euro (EUR) against the main currencies. The euro was the strongest against the Australian dollar.
| USD | Eur | GBP | Jy | CAD | Auditorium | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.91% | 0.02% | 0.24% | 0.10% | 0.69% | 0.54% | 0.48% | |
| Eur | -0.91% | -0,90% | -0.64% | -0.81% | -0.21% | -0.37% | -0.43% | |
| GBP | -0.02% | 0.90% | 0.06% | 0.09% | 0.70% | 0.53% | 0.47% | |
| Jy | -0.24% | 0.64% | -0.06% | -0,14% | 0.40% | 0.27% | 0.37% | |
| CAD | -0.10% | 0.81% | -0.09% | 0.14% | 0.56% | 0.44% | 0.38% | |
| Auditorium | -0.69% | 0.21% | -0.70% | -0,40% | -0,56% | -0,17% | -0.23% | |
| NZD | -0,54% | 0.37% | -0,53% | -0.27% | -0.44% | 0.17% | -0.06% | |
| CHF | -0.48% | 0.43% | -0.47% | -0.37% | -0,38% | 0.23% | 0.06% |
The heat map shows the percentage changes in the main currencies against each other. The basic currency is selected from the left column, while the currency of the menu is selected from the upper row. For example, if you select the euro from the left column and move along the horizontal line to the US dollar, the percentage change displayed in the box will be the EUR (Base)/USD (Quote).
Daily Digest Market Movers: The EU-US Trade Agreement cannot persuade markets
- According to President Es von der Leyen, it was “the best solution we could get”, but it was probably not the best investors. The European Union will face 15% of fees, which is not 30%, but even the original zero-for-agent agreement. 15% of tariffs apply to pharmaceutical products and cars, the main export of euro area to the US. In exchange, Europe will have to invest 600 billion euros in the US and buy 750 billion euros of its gas. The euro responded negatively because the markets analyzed a small letter in the Pact.
- The US dollar maintains a slightly offer tone from last week. The data published on Friday revealed that orders for durable goods in the US were closed by 9.3%, their worst performance in years, but still better than 10.8% decrease predicted by market analysts. In addition, with the exception of transport, the so -called “basic durable goods” increased at 0.2%, beyond the expected 0.1%.
- These figures come after an unexpected decline in the weekly US initial claim without work published the previous day. The demands on unemployment benefits have fallen in the sixth week in a row, reached their lowest level in the last three months, emphasized the labor market resistance, and provided additional freedom for the federal reserve system to maintain interest rates for a longer period of time.
- The Fed’s monetary policy meets on Tuesday and Wednesday, and is expected to leave their comparative funds unchanged to the current range of 4.25% -4.50%. The main attraction of the event will be Chairman of President Jerome Powell to see if the latest trade agreements and potential recovery in the US GDP, which will be published earlier on the same day, can change the bank’s careful attitude to further reduce rates.
EUR/USD violated key support to 1.1700
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EUR/USD At the start of the European meeting, he got under strong pressure and at the beginning of the European meeting interrupted support in the European meeting and in the area of 1700-1.1710, which was confirmed by the head and shoulder pattern (H&S), a classic character for shifting trends. Technical indicators are lower. The 4 -hour relative force index (RSI) plunged into the negative area below 50 and MACD shows intense bear dynamics.
The couple expanded their twist below 22 July to the minimum to 1.1680 and heads for the measured goal of H&S, which is the same as a minimum of 18 and 21, at 1.1617. The euro should be strongly sold if this level is reached, which would probably lead to a certain correction. Furthermore, the other target of the disadvantage would be low in mid -July to 1.1555.
On the other hand, the couple should return above 1,1710 to reduce bear pressure, and move on to Intraday Maxim, 1.1770, and July 24 to 1.1790 will probably challenge bulls in a maximum of 1,1830.
Frequently Questions of Central Banks
Central banks have a key mandate that ensures that there is price stability in the country or region. The economies constantly face inflation or deflation when the prices of certain goods and services are fluctuating. Constant rising prices of the same goods mean inflation, constant reduced prices of the same goods mean deflation. The task of the central bank is to maintain demand in the queue by tuning its political rate. For the largest central banks, such as the US Federal Reserve (Fed), the European Central Bank (ECB) or the Bank of England), the mandate is to maintain inflation near 2%.
The central bank has one important tool to increase or lower inflation, and this is an improvement in its benchmark policy, commonly known as the interest rate. In pre -communicated moments, the central bank issues a statement of its political rate and provides further justification for why it either remains or changes (cutting or tourism). Local banks adequately modify their savings and loans, which in turn makes it difficult or easier to earn on their savings or companies to take loans and invest in their businesses. When the central bank significantly raises interest rates, it is called monetary tightening. When it reduces the reference speed, it is called cash release.
The central bank is often politically independent. Members of the Central Bank Policy Council go through a number of panels and hearing before appointment at the Political Council. Each member in this board often has some belief in how the central bank should control inflation and subsequent monetary policy. Members who want very free monetary policy, low rates and cheap lending to significantly strengthen the economy while they are satisfied to see inflation slightly above 2%, are called “dove”. Members who want to see higher rates to reward savings and want to arrange inflation are called “Hawks” and will not rest until inflation is or just below 2%.
Normally there is a chairman or president who leads every meeting, to create a consensus between Hawks or dove and has a final word to get the votes to avoid 50-50 binding, whether the current policy should be modified. The chairman will present manifestations that can often be monitored live, where the current monetary attitude and outlook are communicated. The central bank will try to enforce its monetary policy without triggering violent fluctuations of rates, shares or currency. All central bank members direct their attitude to the markets before the event of a political meeting. A few days before a political meeting occurs until a new policy is communicated, the members are forbidden to speak publicly. This is called the period of failure.
