EUR/USD showed signs of recovery on Tuesday, regaining much of the losses incurred earlier in the week. The pair is now testing the 1.1200 level, buoyed more by a broad market decline in the US dollar rather than any specific momentum from the eurozone.
Investor reaction to the US Consumer Price Index (CPI) data was muted, with market participants remaining optimistic about ongoing trade deal negotiations between the Trump administration and key global partners. However, all trade tariff concessions made by the US administration are understood to be temporary, dampening enthusiasm for long-term positive sentiment.
April’s CPI inflation in the US showed a slight dip, marking a new three-year low for annualized headline inflation. Despite this, experts expect the impact of the Trump administration’s enforcement of heavy tariffs on major trading partners to be felt in the coming months. Analysts predict that this will likely be the last strong CPI report for some time, given the anticipated repercussions from the tariffs.
On the European front, the German Harmonized Index of Consumer Prices (HICP) will be released on Wednesday. However, as the data is non-preliminary, it is unlikely to stir significant market interest. Similarly, the pan-European GDP figures for Q1, set to be released on Thursday, are expected to show minimal change from the previous quarter.
In the US, inflation figures from the Producer Price Index (PPI) and the latest Consumer Sentiment Survey from the University of Michigan are scheduled for release later this week. The PPI data will be published on Thursday, with the consumer sentiment report due on Friday.
EUR/USD Price Outlook
On Tuesday, markets made a strong push to bring EUR/USD back above the 1.1200 level, though it fell just short of this key technical threshold. Despite the limited upside, the euro is currently trading above the 50-day Exponential Moving Average (EMA) near 1.1070. While bullish momentum remains absent on the daily charts, technical indicators are showing signs of potential upward movement, with oscillators rolling over from oversold conditions, suggesting the possibility of a bullish extension in the near term.
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