Euro edges lower below 1.1550 on Hormuz uncertainty
- EUR/USD loses ground to around 1.1530 in Wednesday’s Asian session.
- Iran rejected the US claim of an open Strait of Hormuz.
- US JOLTS Job Openings declined to 7.35 million in June, weaker than expected.
The EUR/USD pair trades with mild losses near 1.1530 during the Asian trading hours on Wednesday. Uncertainty surrounding US-Iran talks weighs on riskier assets such as the Euro (EUR) against the US Dollar (USD). The US ADP Employment data and ISM Services Purchasing Managers Index (PMI) report are due later on Wednesday. All eyes will be on the US July jobs release on Friday.
The Fars news agency reported that Iran on Tuesday rejected US Treasury Secretary Scott Bessent's and US President Donald Trump's claim that the Strait of Hormuz will open tomorrow under a new deal.
An Iranian official insisted that its ongoing discussions with Oman are not being held with US participation and are aimed at establishing an "intermediate corridor" that will halt both the current Iran-controlled northern and US-backed southern routes. Ongoing tensions in the Middle East continue to boost safe-haven flows, supporting the Greenback and creating a headwind for the major pair.
The US Bureau of Labor Statistics revealed on Tuesday that US JOLTS Job Openings stood at 7.359 million in June. This figure followed the 7.537 million openings seen in May and came in below the market expectation of 7.4 million.
Traders will closely monitor the US July employment data on Friday, which could offer more clues about the health of the labour market and the US interest rate path. In case of weaker-than-expected outcomes, this could undermine the USD against the EUR in the near term.
Euro holds steady as EUR consolidates around the 1.15 area
Analysts at Scotiabank note that the Euro is trading quietly, with the “EUR … little changed on the session” amid a lack of fresh catalysts. With “no major data reports from the Eurozone area on the session,” they judge that spot “appears to be content to consolidate recent gains through the 1.15 area,” reinforcing the sense of a market pausing after its latest advance.
Technical Analysis:
In the daily chart, EUR/USD holds above the Bollinger Bands 20-period simple moving average, but remains capped by a nearby resistance cluster formed by the upper band and the 100-day simple moving average, keeping the broader tone neutral to mildly topside-limited. The Relative Strength Index (14) at about 61 leans into positive territory, hinting that buyers retain some control, yet the proximity of these overhead barriers suggests that upside follow-through may struggle unless this band–moving average cap is decisively cleared.
On the topside, initial resistance is located at the Bollinger upper band near 1.1550, followed by the 100-day simple moving average around 1.1570, a break above which would open the way for a more constructive recovery phase. On the downside, immediate support stands at the Bollinger 20-period middle band near 1.1440, with further protection emerging at the lower band around 1.1330; a sustained drop through these latter levels would undermine the current consolidation and expose the pair to a deeper bearish correction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
