- EUR/USD declines to near 1.0370 as inflation in six states of Germany decelerates in January.
- Donald Trump threatens to impose 100% tariffs on BRICS and 25% on Mexico and Canada.
- The Fed kept interest rates at their current levels on Wednesday.
EUR/USD faces selling pressure and declines to near 1.0370 in Friday’s North American session. The major currency pair declines as the Euro (EUR) weakens across the board amid a slowdown in inflationary pressures in six German states. Softer-than-expected Consumer Price Index (CPI) data for January boosts confidence that Eurozone price pressures are on track to return sustainably to the European Central Bank’s (ECB) desired rate of 2%, which will support the central bank in easing the monetary policy.
On Thursday, ECB President Christine Lagarde showed confidence in announcing a victory over inflation this year in the monetary policy statement after the central bank reduced its Deposit Facility Rate by 25 basis points (bps) to 2.75%. In Friday’s European session, ECB policymaker and Estonian Central Bank chief Madis Muller also said that it is realistic for inflation to be near 2% “by the middle of this year”.
Christine Lagarde’s comments at the press conference indicated that the ECB has kept the door open for further policy easing. Lagarde said that we are still in “restrictive territory” and it is premature to “anticipate at what point where will stop”. She avoided providing a pre-defined interest rate cut path and reiterated that we decide meeting by meeting based on data.
Going forward, investors will focus on the flash Eurozone Harmonized Index of Consumer Prices (HICP) data for January, which will be released on Monday.
But before that, the preliminary German HICP data for January will be published at 13:00 GMT. However, the impact is expected to be limited, as the inflation data in six German states have already indicated the current status of price pressures.
Daily digest market movers: EUR/USD weakens as USD gains on Trump’s tariff threats
- EUR/USD remains under pressure as the broader outlook of the US Dollar (USD) remains firm, with the US Dollar Index (DXY) wobbling around 108.20. The safe-haven appeal of the Greenback strengthens as United States (US) President Donald Trump reiterated his intentions of imposing hefty tariffs on his North American peers and BRICS on Thursday.
- Donald Trump said on his social media platform, TruthSocial, that he requires a commitment from the BRICS that it will “neither create a new currency nor back any other currency” to replace the US Dollar. Trump threatened that any country tries should “face 100% tariffs”, and expect to say “goodbye to selling into the wonderful US economy.”
- Market experts believe that Donald Trump is using tariff measures as a tool to fulfill his economic agenda, and the imposition of hefty tariffs will be inflationary for the US economy. Such a scenario would support the Federal Reserve (Fed) in holding its stance of keeping interest rates unchanged in the range of 4.25%-4.50% for longer.
- On Wednesday, the Fed maintained the status quo and guided to remain in the waiting mode until the central bank sees any “real progress in inflation or some weakness in the labor market”.
- Meanwhile, the next move in the US Dollar will be guided by the US Personal Consumption Expenditure Price Index (PCE) data for December, which will be published at 13:30 GMT. Economists expect monthly core PCE inflation to have grown at a faster pace of 0.2%, compared to a 0.1% increase in November. Year-on-year, core PCE is estimated to have grown steadily by 2.8%.
US Dollar PRICE Today
The table below shows the percentage change of the US Dollar (USD) against listed major currencies today. The US Dollar was the strongest against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.23% | 0.13% | 0.39% | -0.07% | 0.02% | -0.13% | 0.14% | |
| EUR | -0.23% | -0.10% | 0.13% | -0.30% | -0.22% | -0.37% | -0.10% | |
| GBP | -0.13% | 0.10% | 0.25% | -0.19% | -0.12% | -0.26% | 0.00% | |
| JPY | -0.39% | -0.13% | -0.25% | -0.45% | -0.36% | -0.52% | -0.25% | |
| CAD | 0.07% | 0.30% | 0.19% | 0.45% | 0.08% | -0.06% | 0.20% | |
| AUD | -0.02% | 0.22% | 0.12% | 0.36% | -0.08% | -0.14% | 0.12% | |
| NZD | 0.13% | 0.37% | 0.26% | 0.52% | 0.06% | 0.14% | 0.27% | |
| CHF | -0.14% | 0.10% | -0.01% | 0.25% | -0.20% | -0.12% | -0.27% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Technical Analysis: EUR/USD fails to hold 50-day EMA
EUR/USD declines to near 1.0370 in North American trading hours on Friday, below the 20-day Exponential Moving Average (EMA) around 1.0390. The major currency pair resumed its correction after failing to sustain above the 50-day EMA, which trades around 1.0449 at the press time.
The 14-day Relative Strength Index (RSI) faces barricades near 60.00. Such a scenario indicates that the recovery move was short-lived.
Looking down, the January 20 low of 1.0266 and January 13 low of 1.0177 will act as major support for the pair. Conversely, the December 6 high of 1.0630 will be the key barrier for the Euro bulls.
Economic Indicator
ECB Rate On Deposit Facility
One of the European Central Bank‘s three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.
Read more.
Last release: Thu Jan 30, 2025 13:15
Frequency: Irregular
Actual: 2.75%
Consensus: 2.75%
Previous: 3%
Source: European Central Bank
