EUR/CAD remains below 1.1700 due to increased risk aversion

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EUR/USD steadies after three days of losses, trading around 1.1690 during the Asian hours on Friday. The pair remains flat as the US Dollar (USD) maintains its position as safe-haven demand increases amid persistent uncertainty surrounding the United States (US)–Iran conflict.

EUR/USD flats as the US Dollar holds ground due to safe-haven demand amid US–Iran uncertainty.
US intercepted two Iranian supertankers evading its blockade, as Tehran threatens vessels in the Strait of Hormuz.
Eurozone private sector contracted in April at the fastest pace since November 2024 as higher energy costs hit demand and services.

Bloomberg reported on Thursday that the US military intercepted two Iranian oil supertankers attempting to evade its blockade, as Washington continues efforts to restrict Iran’s shipping while Tehran threatens vessels in the Strait of Hormuz.

US President Donald Trump warned that if Iran does not move its oil, its infrastructure would be targeted. Iranian officials, however, denied agreeing to any extension of the truce and accused Washington of breaching it by maintaining a naval blockade on Iranian trade.

Trump also said Israel and Lebanon would extend their ceasefire by three weeks, according to Bloomberg. The move could open the door for a longer-term agreement between the two countries and remove a key obstacle to ending the US conflict with Iran. He added that he plans to host Israeli Prime Minister Benjamin Netanyahu and Lebanese President Joseph Aoun in the near future.

The Greenback found additional support from resilient US economic data. Weekly Initial Jobless Claims rose to 215K from 212K, indicating continued strength in the labor market. Meanwhile, S&P Global PMIs surprised to the upside, with Manufacturing at 54.0 and Services at 51.3, pointing to sustained expansion in business activity.

The Eurozone’s preliminary HCOB Composite PMI unexpectedly declined to 48.6 in April, missing expectations of 50.2 from 50.7 in March. Germany’s flash Composite PMI also fell short, dropping to 48.3 versus forecasts of 51.1, compared to 51.9 in the prior month.

The Eurozone’s private sector contracted in April at the fastest pace since November 2024, as the Iran conflict pushed energy costs higher, weighing on consumer demand and the services sector. Meanwhile, Germany’s Economics Ministry halved its 2026 growth forecast, citing the energy shock stemming from the Middle East conflict.

Euro FAQs

What is the Euro?

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%).

What is the ECB and how does it impact the Euro?

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.

How does inflation data impact the value of the Euro?

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.

How does economic data influence the value of the Euro?

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.

How does the Trade Balance impact the Euro?

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.

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