The Euro serves as the currency for 19 EU countries and is the second-most traded currency worldwide, making up 31% of all forex transactions in 2022. The EUR/USD pair is the most traded, followed by pairs like EUR/JPY and EUR/GBP.

European Central Bank and the Euro’s Value

The European Central Bank (ECB), located in Frankfurt, controls monetary policy and affects the Euro’s value through interest rates. Inflation in the Eurozone significantly influences the ECB’s decisions on interest rates, which in turn impacts the Euro’s strength. Economic indicators like GDP and PMI data also matter, with positive results often strengthening the Euro. The Trade Balance is crucial; a positive balance usually raises the Euro’s value. Currently, the EUR/GBP pair shows signs of fatigue near the 0.8580 level, but support remains strong above the 100-day moving average. The Relative Strength Index (RSI) indicates an upward trend, confirming that bullish momentum is still present, despite some short-term hesitation. Recently, resistance between 0.8595 and 0.8600 has posed a challenge, but a break above this range may lead to movement towards 0.8620 and eventually 0.8738. Conversely, 0.8516 serves as a key support level; if it breaks below, the Euro could weaken to 0.8455 and possibly drop to 0.8415 if selling pressure increases. Short-term attention should shift from chart patterns to the factors driving these potential movements. Uncertainty surrounding trade discussions has affected this pair, particularly with mixed updates. Although we’ve seen some downward pressure, overall technical indicators favor the Euro. Therefore, upcoming news about trade policies should be closely watched. Traders should avoid overreacting to early movements without confirmation, especially since prices are close to a long-term average.

Euro’s Resistance to Downward Pressure

It’s important to see this pair in a broader context. Despite recent ups and downs, the Euro still makes up nearly one-third of all global foreign exchange trades. While EUR/USD is the top choice for liquidity, those monitoring EUR/GBP benefit indirectly from the same monetary influences. The Euro’s recent resilience against downward pressure is largely due to decisions made in Frankfurt. Inflation data plays a vital role in shaping rate expectations. If upcoming inflation numbers are better than expected or remain stable, the market might adjust its outlook for EUR pairs. Core economic indicators, like GDP and manufacturing surveys, are also significant. A strong increase in these areas would support the case for stable rates or even rate hikes, while disappointing data could weaken the Euro and shift support quickly. Don’t underestimate the trade balance, either. Although it doesn’t get as much attention as overall growth figures, it plays an important role in showing foreign demand for the region. A surplus usually leads to increased Euro purchasing, supporting longer-term uptrends. In the upcoming sessions, focus will likely remain on these economic inputs rather than just technical patterns. While patterns are still helpful, price movements are increasingly driven by short-term policy expectations and medium-term economic health indicators. It’s best to be selective and cautious, especially near resistance levels, and to avoid trades with lopsided risk/reward without clear macroeconomic support. Timing is vital in this pair. Create your live VT Markets account and start trading now.

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