EUR/USD fluctuates right below YTD highs with all eyes on the US PCE Inflation release

• The Euro consolidates gains with the US Dollar on the defensive.
• Weak US data and Trump’s attacks on Powell have heightened hopes of further Fed interest rate cuts.
• EUR/USD is wavering around 1.1700 with investors looking from the sidelines ahead of US inflation figures.

The EUR/USD pair appreciates for the seventh consecutive day but remains capped below the nearly four-year high at 1.1745 reached on Thursday. The pair is on track for a 2% weekly rally, buoyed by easing geopolitical fears and increasing confidence that the US Federal Reserve (Fed) will cut interest rates two or even three times in the second half of the year.
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US President Donald Trump’s attacks on the Fed chair, Jerome Powell, and his comments suggesting an early pick of an allegedly more dovish successor, coupled with weak US economic data and voices within the central bank calling for a less restrictive policy, have boosted hopes of easing interest rates.

Data released this week adds to evidence of a US economic slowdown and points in that direction. On Thursday, the first quarter’s US Gross
Domestic Product (GDP) was revised lower, to a 0.5% contraction from the 0.2% previously estimated, while on Tuesday, the US Conference Board figures revealed a decline in Consumer Confidence, to economic growth.

In the Eurozone, markets remain driven by an optimistic wave as the fragile truce between Israel and Iran holds and keeps Oil prices at relatively low levels. Beyond that, investors remain hopeful that a higher infrastructure and defence plan, which is expected to be approved after the summer, will boost economic activity in the region.

The main focus today is the US Personal Consumption Expenditures (PCE) Price Index, which will be observed for further clues about the Fed’s rate cut calendar. Another moderate inflation reading would cement hopes of a rate cut, probably in September, and might add selling pressure on the US Dollar (USD).

Daily digest market movers: Weak data and Trump’s pressure on the Fed are hammering the USD

• The US Dollar depreciated across the board this week. The US Dollar Index (DXY), which measures the value of the Greenback against six major currencies, has lost about 1.7% in the last five days and more than 11% in 2025 so far, hit by a mix of a weakening economy, investors’ concerns about Trump’s erratic trade policy and, ultimately, his attacks to the Federal Reserve’s Independence.
• Trump attacked the Fed chair, calling him “terrible” and “an average mentally person” after Powell reiterated the bank’s cautious stance towards interest rates, and weighed in on announcing his successor after the summer, more than six months before the end of his term. These comments have boosted hopes of Fed rate cuts, and, more importantly, have put the central bank’s independence into question, eroding the US Dollar’s reserve currency status.
• In the macroeconomic data domain, the Eurozone’s Economic Sentiment Indicator has deteriorated to 94.0 against expectations of a slight improvement to 95.12 from May’s 94.8. Consumer Confidence has remained steady at -15.3, and the Business Climate Index has dropped to -078 from -057 in the previous month. The services sentiment has been the only positive news, with an improvement to 2.9 against expectations of a decline to 1.6 after May’s 1.8 reading.
• France’s Preliminary CPI data has shown a larger-than-expected increase in inflation while consumer spending slowed down, although less than expected. Likewise, Spain’s Consumer inflation accelerated in June and Retail Sales increased in May.
• On Thursday, the US GDP Annualized was revised down to a 0.5% contraction in the first three months of the year, amid a decline in consumption, following Trump’s increase in tariffs for imported goods.
• On the other hand, US Durable Goods Orders increased beyond expectations in May, with a sharp increase in orders for aircraft. The headline reading humped 16.4%, about twice the 8.5% increase expected by the market, while excluding transportation orders grew 0.5% against expectations of a flat reading.
• Weekly Jobless Claims data was mixed, with initial claims for unemployment benefits increasing less than expected, but with continuing claims steady at their highest levels since the post-pandemic period, which strengthens the case for a weakening and adds pressure on the Federal Reserve to cut interest rates further.
• Today all eyes will be on the US PCE Prices Index release, the Federal Reserve’s inflation gauge of choice, which is expected to show no further evidence of the impact of tariffs on consumer prices. The headline inflation is expected to have grown at a steady 0.1% pace in May, with year-on-year growth accelerating to 2.3% from 2.1% in the previous month. The core Index is also seen unchanged at 0.1% in the month and 2.6% Y-o-Y, up from 2.5% in April.

EUR/USD is struggling to consolidate above 1.1700

EUR/USD maintains its bullish trend intact on Friday, favoured by US Dollar weakness. The pair, however, has reached the target of the previous two weeks’ bullish flag formation, right above 1.1700, and needs further reasons to climb higher. Today, all eyes are on the US PCE Prices Index, which is likely to determine the pair’s near-term direction. Until that moment, further sideways trading is expected.

On the downside, the pair is finding support at the 1.1680 intraday low ahead of the previous resistance, now a potential support area at 1.1630-1.1640 (June 12, 24, and 25 highs).

Immediate resistance is at Thursday’s high of 1.1745 and above here, the 161.8% Fibonacci extension of the June 10-12 rally at 1.1795.