- EUR/USD rebounds to near 1.1385 as the US Dollar surrenders some gains after the release of the US ADP Employment and Q1 GDP data.
- The US economy has contracted for the first time in a quarter in three years.
- The Eurozone economy rose at a higher-than-expected pace of 0.4% in the first quarter of the year.
EUR/USD recovers some of its initial losses and rebounds to near 1.1385 during North American trading hours on Wednesday. The major currency pair bounces back as the US Dollar (USD) gives up some gains after the release of a string of United States (US) economic data.
Each of the economic data points demonstrates a serious impact of the tariff policy imposed by US President Donald Trump on the so-called “Liberation Day” on April 2. Notably, the US economy has contracted by 0.3% in the first quarter of the year on an annualized basis. This is the first time since the first quarter of 2022 that the US economy has declined. Economists expected the US economy to have grown at a moderate pace of 0.4%, substantially slower than the 2.4% growth seen in the previous quarter.
The ADP Employment Change data for April has missed estimates by a wide margin. The ADP reported that private employers hired 62K fresh workers, significantly lower than estimates of 108K and the prior release of 147K, revised lower from 155K.
Soft employment and a decline in the US GDP growth are expected to boost market expectations that the Federal Reserve (Fed) could start reducing interest rates right from the May policy meeting. According to the MCE FedWatch tool, traders are almost confident that the Fed will keep interest rates in the current range of 4.25%-4.50% next month.
Still, the US economic calendar has to report the Personal Consumption Expenditure Price Index (PCE) data for March, which will be published at 14:00 GMT.
The overall outlook of the US Dollar was already grim amid uncertainty over trade relations between the US and China. Market participants have become increasingly confident that the tariff war between the world’s two largest powerhouses will not resolve in the near term, as comments from US Treasury Secretary Scott Bessent have indicated that he wants Beijing to be the one to initiate rolling back additional import duties imposed on Washington. China raised levies on the US by 125% in retaliation for the 145% tariffs imposed by Donald Trump.
On Monday, Scott Bessent said in an interview with CNBC: “I believe that it’s up to China to de-escalate, because they sell five times more to us than we sell to them, and so these 120%, 145% tariffs are unsustainable.”
Meanwhile, China has listed a number of imports from the US that will be exempted from tariffs, Reuters reported. Investors should not take this move by China as an attempt to de-escalate the trade war, assuming that these products are ones whose substitutes are not currently available in their domestic facilities due to technological or resource limitations.
Daily digest market movers: EUR/USD rebounds as US Dollar falls back
- EUR/USD bounces back as the US Dollar retreats in the North American session. The Euro (EUR) trades cautiously amid a slowdown in the preliminary April Harmonized Index of Consumer Prices (HICP) data from Germany and France, as well as stable inflation in Italy and Spain.
- Year-on-year, German HICP rose by 2.2%, faster than expectations of 2.1% but slower than March’s reading of 2.3%. Inflationary pressures in the German economy were expected to decelerate after scrutinizing the price index data from its six states, released earlier in the day.
- The yearly HICP data from four German states came in lower than the previous readings, while the rest showed faster price growth, suggesting that inflation for the whole of Germany could also fall. In the same period, France’s Consumer Price Index (CPI) (EU Norm) rose by 0.8%, faster than estimates of 0.7% but lower than the 0.9% growth seen in March. In Italy, inflation remained at 2.1%, while data released Tuesday showed that price growth in Spain was also stable.
- Overall, the inflation data from the largest nations of the Eurozone indicate that price pressures have grown moderately. Such a scenario is unfavorable for the Euro as soft inflation data supports market expectations that the European Central Bank (ECB) could continue to cut interest rates.
- Traders have almost priced in a 25 basis points (bps) interest rate reduction by the ECB in the June policy meeting. A slew of ECB officials have projected more slowdown in inflation and economic growth in the face of tariffs imposed by the United States (US) on its trading partners.
- On Tuesday, ECB executive board member Piero Cipollone warned that lower economic and inflation growth due to the US-led global trade war could have an “unambiguously recessionary effect” on the countries involved, Reuters reported. Cipollone anticipated that the recent increase in trade policy uncertainty could reduce “euro area business investment by 1.1% in the first year and real GDP growth by around 0.2 percentage points in 2025-26“.
- Data released on early Wednesday showed that for now, the Eurozone economy is broadly holding up. The preliminary Eurozone Q1 Gross Domestic Product (GDP) came in better-than-expected on both a quarterly and annual basis. Eurostat reported that the economy grew by 0.4% quarter-on-quarter, higher than what economists had expected and than the previous reading of 0.2%.
Euro PRICE Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.01% | 0.31% | 0.31% | -0.05% | -0.15% | 0.14% | 0.02% | |
| EUR | -0.01% | 0.31% | 0.29% | -0.07% | -0.17% | 0.13% | 0.02% | |
| GBP | -0.31% | -0.31% | -0.02% | -0.38% | -0.47% | -0.18% | -0.30% | |
| JPY | -0.31% | -0.29% | 0.02% | -0.37% | -0.45% | -0.11% | -0.26% | |
| CAD | 0.05% | 0.07% | 0.38% | 0.37% | -0.09% | 0.19% | 0.10% | |
| AUD | 0.15% | 0.17% | 0.47% | 0.45% | 0.09% | 0.29% | 0.18% | |
| NZD | -0.14% | -0.13% | 0.18% | 0.11% | -0.19% | -0.29% | -0.12% | |
| CHF | -0.02% | -0.02% | 0.30% | 0.26% | -0.10% | -0.18% | 0.12% |
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 rebounds to near 1.1380
EUR/USD attracts bids near the day’s low around 1.1350 in Wednesday’s North American session. The outlook of the major currency pair remains bullish as the 20-week Exponential Moving Average (EMA) is sloping higher around 1.0890.
The 14-week Relative Strength Index (RSI) climbs to near overbought levels above 70.00 in the weekly chart, which indicates a strong bullish momentum, but chances of some correction cannot be ruled out.
Looking up, the psychological level of 1.1500 will be the major resistance for the pair. Conversely, the July 2023 high of 1.1276 will be a key support for the Euro bulls.