- EUR/USD finds selling pressure near 1.1360 as the US Dollar attracts bids after the release of the US ISM Services PMI data for April/
- The ECB is expected to continue lowering interest rates despite the increase in Eurozone inflation in April.
- This week, the Fed will announce its monetary policy on Wednesday.
EUR/USD faces pressure near the intraday high of 1.1340 during the North American trading hours on Monday. The major currency pair struggles to extend its intraday upside move as the US Dollar (USD) attracts bids after the release of the surprisingly upbeat United States (US) ISM Services Purchasing Managers’ Index (PMI) data for April.
The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, recovers from the intraday low of 99.45 to near 99.70.
The ISM Services PMI came in higher at 51.6 than 50.8, indicating strong growth. While economists expected the data to come in lower at 50.6.
Additionally, the New Orders Index in the services sector has also expanded at a faster pace to 52.3 from the prior release of 50.4. The Employment Index has declined at a moderate pace to 49.0 from 46.2 in March. An all-around performance from the Services PMI data has brought bids for the US Dollar.
Earlier in the day, the US Dollar faced an intense sell-off on persistent uncertainty over US-China trade relations, and as investors turned cautious ahead of the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
Over the weekend, US President Donald Trump expressed confidence while speaking with reporters that bilateral trade deals with some of his trading partners could be announced this week. However, he confirmed not having any dialogue with Chinese leader Xi Jinping this week, but didn’t deny any ongoing trade discussions between officials from both nations.
While the announcement of bilateral trade deals by Washington would indicate that fears of tariffs proposed by US President Trump have peaked now, the long-lasting standoff between the world’s two largest powerhouses will continue to keep investors on their toes.
This week, the major trigger for the US Dollar will be the Federal Reserve’s (Fed) monetary policy meeting, which will be announced on Wednesday. The Fed is widely anticipated to leave interest rates unchanged in the range of 4.25%-4.50%. Therefore, investors will pay close attention to the monetary policy statement and Fed Chair Jerome Powell’s press conference to get cues about the interest rate outlook.
Better-than-expected Nonfarm Payrolls (NFP) data for April and elevated consumer inflation expectations in the face of Donald Trump’s tariff policy will be a limiting factor for the Fed to reduce interest rates.
EUR/USD gains while higher Eurozone HICP fails to impact ECB dovish bets
- EUR/USD at the expense of the US Dollar (USD). The Euro (EUR) trades broadly flat while traders are increasingly confident that the European Central Bank (ECB) will reduce interest rates again in the June policy meeting despite hotter-than-expected Eurozone Harmonized Index of Consumer Prices (HICP) data for April.
- The data showed on Friday that the core HICP – which excludes volatile components like food, energy, alcohol, and tobacco – grew at a faster pace of 2.7% compared to estimates of 2.5% and the March reading of 2.4%. In the same period, the headline HICP rose steadily by 2.2% on year, faster than estimates of 2.1%.
- Traders continue to bet on more interest rate cuts from the ECB as they are more concerned about the Eurozone economic outlook due to the fallout of Donald Trump’s protectionist policy than the slight increase in inflationary pressures.
- On Friday, ECB Vice President Luis de Guindos expressed confidence in an interview with Austria’s Die Presse newspaper that the central bank could continue reducing interest rates, Reuters reported. “It depends on how inflation develops. But we can be optimistic here,” de Guindos said, after being asked how long the ECB will continue reducing interest rates.
- During European trading hours, the Eurozone Sentix Investor Confidence Index improved to -8.1 in May following April’s -19.5 despite growing economic risks from Trump’s international policies.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Canadian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.14% | -0.39% | -0.70% | 0.19% | -0.31% | -0.48% | -0.50% | |
| EUR | 0.14% | 0.03% | -0.29% | 0.61% | 0.11% | -0.06% | -0.09% | |
| GBP | 0.39% | -0.03% | -0.55% | 0.58% | 0.08% | -0.09% | -0.11% | |
| JPY | 0.70% | 0.29% | 0.55% | 0.90% | 0.41% | 0.31% | 0.31% | |
| CAD | -0.19% | -0.61% | -0.58% | -0.90% | -0.79% | -0.67% | -0.69% | |
| AUD | 0.31% | -0.11% | -0.08% | -0.41% | 0.79% | -0.17% | -0.20% | |
| NZD | 0.48% | 0.06% | 0.09% | -0.31% | 0.67% | 0.17% | -0.03% | |
| CHF | 0.50% | 0.09% | 0.11% | -0.31% | 0.69% | 0.20% | 0.03% |
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).
Technical Analysis: EUR/USD holds key 20-day EMA
EUR/USD holds recovery above the key level of 1.1300 on Monday from its three-week low of 1.1265 posted on Thursday. The major currency pair rebounded after attracting bids near the 20-day Exponential Moving Average (EMA) around 1.1260.
The 14-day Relative Strength Index (RSI) falls inside the 40.00-60.00 range, indicating that the bullish momentum has concluded for now. However, the upside bias still prevails.
Looking up, the psychological level of 1.1500 will be the major resistance for the pair. Conversely, the 25 September high of 1.1214 will be a key support for the Euro bulls.
Economic Indicator
ISM Services PMI
The Institute for Supply Management (ISM) Services Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US services sector, which makes up most of the economy. The indicator is obtained from a survey of supply executives across the US based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that services sector activity is generally declining, which is seen as bearish for USD.
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