The EUR/USD currency pair is experiencing slight losses, currently trading around 1.1340. This comes after a significant sell-off of the US Dollar triggered by a US federal court’s reversal of a ruling that had previously blocked tariffs imposed by the Trump administration. The appeals court’s decision has intensified concerns regarding the trade dynamics and has somewhat diminished the dollar’s valuation after a turbulent day.
Investor anxiety surrounding unpredictable trade policies, along with fears about the US fiscal landscape, has contributed to a sustained depreciation of the dollar over recent months. The potential impact of a tax-reduction bill, expected to considerably inflate the national debt, has further fueled a trend among investors to divest from US assets.
On the economic front, recent US data has not alleviated market concerns. Weekly Initial Jobless Claims climbed to 240,000, surpassing the expected 230,000, while the Gross Domestic Product (GDP) numbers confirmed a contraction in the economy during the first quarter. Meanwhile, German Retail Sales figures have not boosted the EURO , raising apprehensions about the Eurozone’s economic health, although the effect has been relatively minor. The market is now fixated on the upcoming German Consumer Prices Index, which is anticipated to offer further insights into economic conditions.
Despite the dollar’s recent tumble, it has begun to stabilize as investors prepare for the US Personal Consumption Expenditures (PCE) Price Index report. Projections suggest a 0.1% increase in inflation for April, with the annual figure easing slightly to 2.2%. For the core metric, which is more relevant for monetary policy considerations, a decline from 2.6% to 2.5% year-on-year is expected.
In the EURO Area, a surprising drop in German Retail Sales by 1.1% in April exceeds expectations of a 0.2% rise, signaling weaker consumption patterns within Europe’s largest economy. With the German CPI report anticipated, the market is looking for indications of moderation, as an annual rate of 2.1% is projected and the core index is expected to decrease to 2%. These results could reinforce the position for further easing by the European Central Bank in their upcoming sessions, putting additional pressure on the EURO .
From a technical perspective, EUR/USD ’s recent movements have been constrained by a resistance level near 1.1390. Although Thursday’s trading exhibited a bullish pattern, the upward trajectory must surpass both the 1.1390 resistance and a weekly high of 1.1420 for a trend reversal. Conversely, failing to break these levels could lead to renewed bearish momentum, potentially driving the pair toward key support levels around 1.1220.
