Insights 
VT 
Key Points
- EURUSD retreats from session high of 1.13900 to settle near 1.13365, shedding 0.25% on the day.
- German retail sales missed estimates while French and Spanish inflation cooled — reinforcing rate-cut expectations for next week’s ECB meeting.
The euro weakened slightly on Friday, trimming earlier gains as European data painted a fragile picture of the region’s recovery and strengthened the case for further easing by the European Central Bank.
In Germany, retail sales contracted 1.1% month-on-month in April, marking the first monthly decline since December and falling well short of expectations for a 0.2% rise. The data added to concerns that Europe’s largest economy is struggling to sustain household consumption in the face of rising borrowing costs and softening external demand.
Meanwhile, inflation figures released across the bloc offered a dovish counterweight. Spain’s CPI eased to 1.9%, down from 2.2% in March and now below the ECB’s 2% target. France’s CPI slowed dramatically to 0.7%, its lowest since February 2021, and well under consensus estimates of 0.9%.
These soft inflation reads have all but confirmed that the ECB will proceed with a 25 basis point rate cut at next week’s policy meeting. With core inflation cooling and domestic demand stalling, policymakers may have room to cut without reigniting price pressures — especially as the Fed holds rates steady for longer.
Tariff Tensions Shift Tone
The euro’s weakness was compounded by a rebound in the dollar, driven in part by renewed trade tension headlines. A U.S. appeals court temporarily paused a lower court ruling that blocked former President Trump’s reciprocal tariffs, restoring the legal groundwork for their enforcement.
This development has reintroduced geopolitical uncertainty into currency markets, and with the euro’s recent strength fuelled largely by relative rate divergence, the fresh volatility risks skewing sentiment back toward the greenback in the near term.
Technical Analysis
EURUSD rose sharply from the 1.12108 low on 9 May to a peak of 1.13900 on 30 May, marking a strong bullish recovery across multiple sessions. However, momentum has since faded, and price has gradually retraced toward the 1.13360 region, just above the 30-period moving average. The decline is accompanied by a bearish MACD crossover, indicating that the recent uptrend may be losing steam in the short term.
Picture: EURUSD eases from 1.139 peak, stalls near 1.133 as bullish momentum fades and consolidation sets in, as seen on the VT Markets app
While the 1.139 level now acts as immediate resistance, support seems to be forming around the 1.13270–1.13300 zone. If the pair fails to regain upward momentum, we could see further downside toward the 1.1300 handle. A break above 1.139 would be required to resume the bullish structure, though the flattening MAs suggest consolidation may take precedence in the near term.
In the broader context, while EURUSD is still holding above key May lows, its rejection from 1.13900 and weakening Eurozone data leaves it vulnerable to any upside surprises from the U.S. economic front — especially around core PCE and payrolls.
