Insights 
VT 
The EUR/USD pair increased by 0.15% to nearly 1.1200 during North American trading. This movement is influenced by the US Dollar’s decline following April’s US Producer Price Index (PPI) and Retail Sales data.
The US Dollar Index dropped by 0.3% to around 100.70. Reported data showed a slowdown in producer inflation, with headline PPI rising 2.4% year-on-year, below expectations, and core PPI at 3.1%.
Monthly PPI Performance
Month-on-month, headline and core PPI deflated by 0.5% and 0.4%, respectively. Meanwhile, US Retail Sales slightly exceeded expectations, rising 0.1%.
European Central Bank officials anticipate further interest rate cuts due to decreased inflationary pressures. Trade negotiations between the European Union and the US remain a focus, with potential countermeasures if talks falter.
The Eurozone’s first-quarter GDP growth was lower at 0.3%, maintaining an annual growth of 1.2%. Employment changes showed a higher increase of 0.3% quarter-on-quarter.
On the US-China front, progress in trade talks suggests de-escalation. The US Treasury Secretary announced ongoing negotiations with China, raising hopes for a trade deal.
Technically, EUR/USD hovers around the 1.1200 mark, with the 20-day EMA acting as resistance at 1.1210. Key resistance and support levels are at 1.1425 and 1.1000, respectively.
The latest movement in the EUR/USD pair reflects a response to weaker readings from US producer inflation and a marginal beat in retail sales — though not sufficiently strong to counterbalance the broader picture. With headline PPI coming in at 2.4% year-on-year and core PPI at 3.1%, both falling shy of market expectations, we’ve seen firm confirmation that price pressures are easing through the production pipeline. Monthly deflation in April of 0.5% for headline and 0.4% for core also provides firm evidence of slack further up the supply chain.
Despite retail sales edging up by 0.1%, which initially might have been seen as a stabilising factor, the underlying trend doesn’t indicate a resurgence in consumer demand strong enough to offset inflation data. Consequently, the greenback lost momentum, pulling the US Dollar Index lower to 100.70, a level not visited since earlier this year.
European Economic Signals
Turning to Europe, the signal from policymakers is clear: inflation is cooling, and the door to monetary easing remains open. Comments from several ECB members reinforce the view that policy can be less restrictive without jeopardising their long-term goals. However, with GDP expanding just 0.3% in Q1 and annual growth stuck at 1.2%, the region is still lagging behind broader expectations for output. Employment, though, showed a bit more life with a modest 0.3% quarterly uptick – giving a reason for cautious optimism, but little more.
In terms of positioning, subtle shifts in sentiment are emerging. We’re watching EUR/USD test the 1.1200 region, eyeing that 20-day EMA resistance level at 1.1210, which isn’t being convincingly breached for now. This level merits attention on any break higher, as it leads toward 1.1425, a zone with some congestion on the charts. Support seems firmer down at 1.1000, where bids have historically offered protection.
Trade relations continue to simmer in the background, with Europe and the United States still working through points of contention. Should tensions escalate or talks break down, the Euro could face a fresh wave of selling, especially with reduced economic momentum under the surface. Still, retaliatory action hasn’t yet surfaced, and that absence has helped keep volatility contained — for now.
On the other side of the globe, the thaw between Washington and Beijing is helping stabilise risk appetite. Steady progress from talks has kept safe-haven flows muted, keeping the dollar under gentle pressure. Any resolution here would likely extend this trend, though it’s worth remembering that policy shifts can be quick and the results uneven.
In forward-looking positioning over the next few weeks, price action near the 1.1200 zone will bear careful scrutiny. Should this level turn into sustained support, the path to higher resistance near 1.1425 may open — provided fundamental developments don’t reverse course. The support structure at 1.1000 should remain a key level from which bounces might occur, particularly in thin liquidity or headline-driven sessions. For now, we proceed with a risk-adjusted bias, watching data as it lands and managing exposures accordingly.
