The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', a way to mention the most important pairs worldwide. The US will publish May Existing Home Sales after Wall Street’s opening. The EU has published the April Current Account, which posted a seasonally adjusted deficit of €5.76 billion, worse than anticipated. The calendar will remain light on Tuesday. Still, and as the European Central Bank stays two steps behind the rest of the major central banks, the comment had no impact on EUR/USD. US President Joe Biden referred to the issue over the weekend, saying they could avoid recession, lifting the market’s confidence.Īcross the pond, ECB Governing Council member Olli Rehn said it is very likely that the September rate hike would be bigger than the 25 bps planned for July. Nevertheless, optimism is limited, as recession fears lie in the background. Stocks are up, while demand for government bonds is down, pushing yields slightly up as demand for safety decreased. The pair retreated from its high but holds on to daily gains, trading at around 1.0560 ahead of the US session. The EUR/USD is traded in amounts denominated in the US Dollar.The EUR/USD pair kept advancing early in the European session to hit an intraday peak of 1.0582 amid a better perception of risk. So, stay up-to-date on the latest political and economic news. The real challenge begins in keeping an eye on the various countries within the Eurozone. Instability, as seen in the Brexit referendum, can entirely change the direction of the currencies.
Political Events - Another critical factor is the political aspect. German Industrial Production – This measures a change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities. If the annual CPI deviates from the central bank target, the ECB could make use of its monetary policy tools to keep inflation in check. Consumer Price Index – Since one of the goals of the ECB is to maintain price stability, they keep an eye on inflation indicators such as the CPI. Employment Change – The Euro is also sensitive to changes in employment, particularly in the Eurozone's largest economies like Germany and France. Gross Domestic Product – the Gross domestic product is the central measure of economic growth in the region. Better than forecast data increases the demand for the related currency and impacts the value of either the Euro or the US Dollar, causing fluctuations in the EUR/USD exchange rate. Top of the line economic events include GDP, Employment Change, Industrial Production, and Consumer Price Index. Economic Events:Īny movement in the US and Eurozone economic events determines the exchange rates. In contrast, a hawkish monetary policy (contractionary policy) strengthens the single currency Euro. A dovish policy, which is also known as expansionary policy, weakens the currency. Several factors can impact the EUR/USD valuation, including:ECB & US FED Monetary Policies: The European Central Bank and the Federal Reserve control the supply of money in the market, to keep the economy on track. What Determines the EUR/USD Exchange Rate? For example, if the pair is trading at 1.20, it means that it takes 1.20 US dollars to buy 1 Euro. But while strong volatility and volume bring day traders from all over the world to EUR/USD, producing substantial profits is no straightforward feat.The currency pair indicates how many US dollars (the quote currency) are needed to purchase one Euro (the base currency). It's not much of a surprise that the EUR/USD is the most popular traded currency pair in the world. Representing two of the largest economies in the world, the value of the EUR/USD depends significantly on the relative economic strength of each nation. The EUR/USD is the most frequently traded currency pair in forex, nicknamed the Fiber. 
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