EUR/USD traded within a familiar range on Tuesday, closing the session marginally lower at US$1.1127. The euro US dollar exchange rate has had a very quiet start to this week, trading approximately at the same level that it opened the week at. The euro is cautiously higher versus the dollar in early trade on Wednesday.

In the absence of any eurozone macro-economic data on Tuesday, trade was firmly under the spotlight, but this time between the EU and the US. EU Trade Commissioner Phil Hogan travelled to the US on his first official trip to Washington for crunch talks. Phil Hogan is on a four-day visit to the US as transatlantic relations are at a low point.

Tough discussions are expected this week between Phil Hogan and top US trade representative, including Robert Lighthizer to discuss a lengthy list of issues. The EU is currently running a trade surplus with the EU which has caught Trump’s eye. Then there is the ongoing issue in relation to the Airbus-Boeing dispute and the tariffs that Trump imposed following the WTO ruling. The White House also threatened tariffs on Irish products such as whiskey, which were excluded from the original list. Tensions with France and threats to impose tariffs on French products such as cheese and champagne are also expected to be on the agenda.

Investors will be watching headlines from these talks closely. Signs of easing tensions would be good news for the eurozone economy and therefore good news for the euro.

Trade Deal Details To Disappoint?

The US dollar traded flat across Tuesday as US inflation data missed analysts forecasts and as investors looked cautiously ahead to today’s signing of the US – China trade deal.

US inflation showed signs of growth easing into the end of the year. Consumer prices increased 0.2% month on month in December, below the 0.3% predicted. Annually inflation increased 2.3%, slightly below 2.4% forecast. The data is not expected to provoke any change in policy from the Federal Reserve, which has indicated that rates will stay on hold for now.

Today investors will focus on the signing of the US – China trade deal. News that the US will not cancel tariffs on Chinese imports until after the US elections has dented sentiment slightly ahead of the key event. Investors are trading cautiously as they await the details of the deal.

 

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.

 


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