The euro struggled to maintain upward momentum against the US dollar on Wednesday, with the EUR/USD pair settling into a flat holding pattern just below the 1.1200 mark. Despite an early push higher, the pair failed to break above this critical resistance level as traders remained cautious ahead of key US inflation data.
This week’s European economic releases have provided little impetus for the shared currency. Germany’s final Harmonized Index of Consumer Prices (HICP) for April matched expectations, offering no surprises to shift market direction. The broader eurozone calendar has also been light, contributing to subdued price action in EUR/USD.
Across the Atlantic, mid-tier US economic data provided a breather for markets following Tuesday’s Consumer Price Index (CPI) release. Attention is now firmly on Thursday’s Producer Price Index (PPI) figures, which could offer fresh signals on inflation trends and Federal Reserve policy direction. Core PPI is forecast to slow to 3.1% year-over-year from 3.3%, potentially reinforcing expectations of easing inflationary pressures.
However, analysts warn that recent tariff developments could begin to distort headline inflation metrics as early as May. Rising trade costs may complicate the Federal Reserve’s path forward, even as traditional inflation gauges moderate.
Technical Outlook: EUR/USD Eyes Breakout Despite Flat Action
Despite lacking bullish conviction, the EUR/USD pair continues to trade above its 50-day Exponential Moving Average (EMA), currently near 1.1070. While the daily candlestick patterns reflect indecision, momentum indicators have begun to reverse from oversold conditions, signaling a potential bullish extension if buyers regain control.
To gain traction, EUR/USD would need a decisive push above the 1.1200 barrier—a level that has remained elusive throughout the week. A sustained break could open the door to further gains, but absent a catalyst, the pair remains vulnerable to downside risks in the near term.
Markets now await Thursday’s US PPI release for a clearer directional cue.
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