Insights 
VT 
EUR/USD is seeing selling pressure as it trades lower near 1.1350 following a peak of 1.1425. This is attributed to a stronger US Dollar, driven by hopeful progress in US-EU trade talks.
The US Dollar Index rose by 0.4% to near 99.35, reflecting its value against six major currencies. Comments from US President Donald Trump alluded to quickening trade negotiations with the EU, following the postponement of proposed tariffs.
Eurozone Inflation Impact
In the eurozone, French inflation data showed cooling, with a monthly decline of 0.2% and a year-on-year rise of 0.6%. This could lead European Central Bank (ECB) officials to consider further monetary easing.
Varying opinions exist within the ECB regarding rate cuts in June. Some officials anticipate a rate reduction, while others, like Austria’s central bank governor, advise against it.
Financial markets anticipate a 25 basis points cut in the ECB Deposit Facility Rate. Looking forward, inflation data from Germany, Spain, Italy, and the eurozone will be closely watched.
Technical analysis shows the EUR/USD trading near 1.1350, holding above the 20-day Exponential Moving Average of 1.1277. Bulls may gain momentum if the Relative Strength Index exceeds 60.00, with resistance at 1.1475 and support at 1.1215.
The recent move lower in EUR/USD—currently stabilising around 1.1350—owes much to a firmer Greenback, which picked up traction after remarks from President Trump stirred optimism over an acceleration in trade conversations between Washington and Brussels. The push higher in the US Dollar Index, now edging closer to 99.35, only reinforces that view. Markets welcomed the delay in additional tariffs, interpreting it as breathing room for better negotiation outcomes.
On the European side, the release of French inflation data underscored a notable drop. Prices contracted by 0.2% month-on-month, easing the annual pace to 0.6%. We believe such numbers lend weight to the expectations that the ECB will err on the side of more accommodation, possibly as soon as next month. The observed deceleration in consumer prices suggests domestic price pressures, at least in France, are still muted enough to warrant policy support.
ECB Internal Divergence
However, there’s a split developing within the ECB ranks that’s worth being aware of. While some policymaking voices lean towards loosening—the market’s 25 basis point rate-cut pricing reflects this—a degree of resistance remains. Holzmann, governor of Austria’s central bank, has publicly advised restraint, pushing back against the growing expectation for near-term easing. This internal divergence may inject some uncertainty into the ECB’s approach, particularly if incoming inflation readings fail to align across other large eurozone economies.
We expect upcoming CPI figures from Germany, Spain, and Italy to shape the central bank’s tone further. Markets keen on positioning around European monetary policy should treat those readings as decisive, not supplementary. A firm print out of Germany, for instance, could embolden ECB hawks and stall bearish pressure on the euro. Weak data across the bloc, however, will likely reinforce the pricing of rate reductions and could send EUR/USD to re-test technical support.
On the technical side, the price still sits above its 20-day Exponential Moving Average, suggesting mild trend-following support remains. A relative strength index nearing neutral levels indicates neither buyer exhaustion nor seller dominance. But momentum could tilt if RSI clears the 60 mark. Should resistance at 1.1475 give way, that could signal a broader unwinding of dollar strength narrative. Meanwhile, a fall beneath support near 1.1215 would open space for a deeper correction.
From where we stand, it’s a matter of watching how economic data and policymakers’ commentary align. The chart action tells part of the story, but upcoming fundamentals—particularly inflation data and rate-setting communications—will dictate the next move. Traders who adapt their risk exposure in response to these inputs will be better positioned to weather upcoming swings, particularly as pricing reacts more sensitively to central bank divergences.
