The EUR/USD pair is trading with mild gains near 1.1380 on Thursday, as the US Dollar (USD) shows signs of fatigue. Despite a robust release of domestic economic data—highlighting sticky inflation, resilient labor markets, and upwardly revised growth—the greenback has struggled to maintain its momentum, allowing the Euro to find a slight foothold in short-term trading.
Key Takeaways
- US Inflation Metrics: The annual PCE Price Index climbed to 4.1% in May, while the core PCE rose to 3.4%, both aligning with market expectations.
- Economic Growth & Labor: US GDP for the first quarter was revised upward to 2.1%, and Initial Jobless Claims for the week ending June 20 fell to 215K.
- Technical Stance: The EUR/USD remains under bearish pressure, trading below key moving averages and facing immediate resistance at 1.1383–1.1388.
US Economic Resilience vs. USD Momentum
The US economic landscape remains fundamentally strong, yet the currency markets are showing a decoupled reaction. The Bureau of Economic Analysis reported that the annual US PCE Price Index reached 4.1% in May, up from 3.8% in April. Meanwhile, the core PCE—the Federal Reserve’s preferred inflation gauge—hit 3.4%.
Simultaneously, the labor market remains a pillar of strength, with Initial Jobless Claims dropping to 215K, well below the previously revised figure of 227K. Furthermore, the final estimate for Q1 US GDP was upgraded to an annualized rate of 2.1%, significantly higher than the initial 1.6% estimate. Despite this data-heavy backdrop typically favoring the dollar, the USD has failed to capitalize on the news, providing a modest relief rally for the EUR/USD.
Technical Outlook and Market Support
On the 4-hour chart, the EUR/USD is battling to regain stability. Trading at 1.1380, the pair continues to face a bearish near-term bias as it remains anchored below the 20-period Simple Moving Average (SMA) at 1.1383 and the 100-period SMA at 1.1521.
The Relative Strength Index (RSI) has trended into the mid-40s, suggesting a stabilization of momentum rather than a confirmed trend reversal. Traders should monitor the following key levels:
- Immediate Resistance: A cluster at 1.1383 (20-period SMA) and 1.1388. Breaking this ceiling is essential to ease downside pressure.
- Primary Support: Initial floors are identified at 1.1360, followed by further support levels at 1.1336 and 1.1324.
While the Eurozone saw a minor improvement in the German GfK Consumer Confidence survey for July—rising to -29.2 from -29.7—the reading remains deep in negative territory, leaving the currency sensitive to any renewed strength in the US Dollar.
