EUR/USD slips further below 1.1330 as the US Dollar strengthens ahead of the PCE inflation data release

EUR/USD extends its retreat from Thursday’s highs, trading below 1.1330 as investors reduce their Dollar short positions ahead of the release of April’s US Personal Consumption Expenditures (PCE) Price Index.

The sharp USD sell-off on Thursday followed a US federal court’s reversal of the block on President Donald Trump’s tariffs.

Concerns over unpredictable US trade policies and mounting fears about US fiscal stability—exacerbated by a tax-cut bill expected to add trillions to the already high US debt—have fueled a “Sell America” trend, weighing on the Dollar over the past two months.

On the economic front, Thursday’s US data failed to boost market sentiment, with weekly Initial Jobless Claims rising more than expected and GDP figures confirming an economic contraction in Q1.

Meanwhile, in Europe, weak German Retail Sales data added to worries about the Eurozone’s largest economy, though the impact was limited. Investor attention now turns to today’s German Consumer Price Index (CPI) release.

Daily Digest Market Movers: US Dollar Finds Support Ahead of PCE Report

• The US Dollar plunged sharply after the US Court of Appeals temporarily halted the previous day’s ruling by the Court for International Trade, which had blocked most tariffs imposed on April 2. This ruling reversal reignited global trade uncertainties and increased pressure on US assets. However, the Greenback managed to regain some stability on Friday as investors prepared for the release of the US Personal Consumption Expenditures (PCE) Price Index later in the day.
• US PCE inflation is forecasted to have risen by 0.1% in April following a flat reading in March, while the annual inflation rate is expected to ease slightly to 2.2% from 2.3%. The core PCE figure—closely watched by the Federal Reserve—is also anticipated to increase by 0.1% month-over-month, with the annual rate easing to 2.5% from 2.6% in March.
• Thursday’s data revealed that US Weekly Jobless Claims rose to 240,000, surpassing expectations of 230,000, while the previous week’s claims were revised down slightly to 226,000 from 227,000. Additionally, first-quarter US GDP confirmed a contraction of -0.2%, though this was an improvement on the earlier estimate of -0.3%. Consumer spending also slowed more than expected, with core Personal Consumption Expenditures easing to 3.4% in Q1 compared to the anticipated 3.5%, fueling concerns about weakening economic momentum.
• In the Eurozone, German Retail Sales unexpectedly dropped by 1.1% in April, contrary to forecasts of a 0.2% rise, highlighting sluggishness in the region’s largest economy. The key focus for the day will be Germany’s Consumer Price Index (CPI), expected to show steady annual inflation at 2.1% with core inflation easing to 2.0% from 2.2%. These figures could support expectations of further European Central Bank (ECB) easing in June, potentially weighing on the Euro.

Technical Analysis: EUR/USD Faces Resistance Near 1.1390

EUR/USD bounced strongly on Thursday, forming a bullish engulfing candle on the daily chart—a positive sign that requires confirmation. For the bullish outlook to hold, the pair needs to break above the former trendline support—now resistance—at 1.1390, as well as clear the weekly high near 1.1420.

If confirmed, the next target will be the April 22 high around 1.1545. Conversely, failure to surpass 1.1420 could empower bears, increasing downside pressure toward the 1.1220 support zone, followed by key levels at 1.1135 (May 16 low) and 1.1070 (May 12 low).

EUR/USD 4-Hour Chart Analysis