The euro rises to a four-year high against the US dollar
What’s happening:-
The EUR/USD forex pair surged to around four-year highs on Monday amid weakness in the US dollar.
What happened:-
The greenback remained under pressure amid concerns over rising US government deficit and worries related to trade agreements with major economies.
Investors also assessed economic data released by the Eurozone during Monday’s session.
Why it matters:-
Global investors are monitoring trade developments between the US and some of its biggest partners ahead of the expiration of President Donald Trump’s 90-day respite on reciprocal tariffs. Canada recently scrapped its proposed digital services tax in a bid to ease trade tensions with the US.
The dollar struggles near its lowest levels in four years
The European Union indicated its willingness to accept a trade deal with the US, which would impose a 10% tariff on several of its exports.
Meanwhile, the US and China have reached a deal around shipments of rare earth minerals from China to the US.
Increased speculations of the Federal Reserve announcing interest rate cuts this exerted further pressure on the US dollar, lending support to the EUR/USD forex pair.
The US dollar index, which measures the greenback’s performance versus a basket of major peers, declined more than 0.3% to 96.88 on Monday. The index recorded losses for the sixth straight month and logged its weakest half-year since the 1970s.
Euro versus dollar
Economic data released on Monday showed bank lending to households in the Eurozone grew by 2.0% year-over-year to €7.002 trillion in May. This marked the fastest pace since May 2023 and came in-line with market estimates. Bank lending to non-financial corporations rose by 2.5% year-over-year to €5.23 trillion in May, versus 2.6% in the previous month.
The EUR/USD pair gained more than 0.5% to 1.1790 on Monday, with the forex pair surging to its highest level since September 2021. The single currency rose around 3.8% last month versus the greenback, while surging around 14% year-to-date.
What to watch:-
Investors will continue monitoring trade negotiations between the US and EU which could significantly impact the euro ahead.
Euro price today
Data on HCOB manufacturing PMI (1200 UAE Time), ECB Consumer Inflation Expectations (1200 UAE Time) and inflation rate (1300 UAE Time) from the Eurozone will be released today. The HCOB Flash Eurozone manufacturing PMI is expected to remain unchanged from the previous month at 49.4 in June, while median inflation expectations in the Eurozone are expected to rise to 3.2% in May from 3.1% in April.
Analysts expect Eurozone’s consumer price inflation to accelerate to 2% year-over-year in June, from 1.9% in May.