EUR/USD: Euro Cautiously Higher On Trade Deal Optimism

The euro trended lower versus the US dollar across the previous week. The euro US dollar exchange rate lost 0.3% and ended on Friday at US$1.1122. The pair is edging higher as trading kicks off for the new week.

The euro declined in value across the previous week despite economic data surprising to the upside. German industrial production figures and a tentative rebound in the eurozone wide manufacturing sector were shrugged off by investors. Instead the euro proved to be more susceptible to international developments.

US – Iran tensions earlier last week weighed on the common currency as investors feared the impact that an escalation of tensions could have on the global economy. An additional drag on the global economy could prevent Germany from recovering from its current slowdown, particularly in manufacturing.

This week is a quieter week on the eurozone economic calendar. The first high impacting release is not due until Wednesday, with German GDP figures. Improved sentiment ahead of the signing of the U – China trade could also help lift the euro.

Trade Deal To Overshadow Iran Conflict Risk

Last week geopolitical tensions, optimism surrounding the signing of the US – China phase one trade deal and a disappointing non-farm payroll report drove the US dollar. US – Iran tensions cooled mid week as the two sides stood down. The dollar pared some gains on Friday, after the US jobs report missed expectations in both the headline jobs creation component on the report and wage growth.

This week the long-awaited signing of the US – Sino phase one trade deal is bringing optimism to the start of the trading week. There was no escalation in geopolitical risk over the weekend, this means that positivity from the US – China trade deal is expected to overshadow risk of conflict in Persia.

China and the US are due to sign the trade deal agreed in December on 15th January. Investors will pour over the details of the 86-page document which haven’t been released yet. There is also a possibility that the US will start trade talks with Europe this week which could provide a fresh bout of volatility.

There is no high impacting US macroeconomic data today. Tomorrow sees the release of US inflation data.



What do these figures mean?
When measuring the value of a pair of currencies, one set equals 1 unit and the other shows the current equivalent. As the market moves, the amount will vary from minute to minute.

For example, it could be written:

1 EUR = 1.12829 USD

Here, €1 is equivalent to approximately $1.13. This specifically measures the euro’s worth against the dollar. If the U.S. dollar amount increases in this pairing, it’s positive for the euro.

Or, if you were looking at it the other way around:

1 USD = 0.88789 EUR

In this example, $1 is equivalent to approximately €0.89. This measures the U.S. dollar’s worth versus the euro. If the euro number gets larger, it’s good news for the dollar. is a news site only and not a currency trading platform. is a site operated by TransferWise Inc. (“We”, “Us”), a Delaware Corporation. We do not guarantee that the website will operate in an uninterrupted or error-free manner or is free of viruses or other harmful components. The content on our site is provided for general information only and is not intended as an exhaustive treatment of its subject. We expressly disclaim any contractual or fiduciary relationship with you on the basis of the content of our site, any you may not rely thereon for any purpose. You should consult with qualified professionals or specialists before taking, or refraining from, any action on the basis of the content on our site. Although we make reasonable efforts to update the information on our site, we make no representations, warranties or guarantees, whether express or implied, that the content on our site is accurate, complete or up to date, and DISCLAIM ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Some of the content posted on this site has been commissioned by Us, but is the work of independent contractors. These contractors are not employees, workers, agents or partners of TransferWise and they do not hold themselves out as one. The information and content posted by these independent contractors have not been verified or approved by Us. The views expressed by these independent contractors on do not represent our views.