Euro Declines Further After Robust U.S. PPI Data

Fundamental Analysis

* • PPI Heat: The euro continues to weaken against the dollar after stronger-than-expected U.S. PPI data was released. U.S. Core PPI increased at an annual rate of 2.8%, exceeding both market forecasts and prior figures of 2.7% and 2.6%. This higher-than-expected producer inflation, along with persistent overall inflation, has fueled concerns that inflation could remain stubbornly high, potentially leading the Fed to slow its pace of interest rate cuts more than initially anticipated. At the same time, expectations of a 25-basis-point cut to the ECB’s Main Refinancing Rate are adding pressure on the euro. ECB officials, responding to ongoing economic challenges in the EU, have already cut rates twice this year and are expected to continue with additional 25-basis-point reductions in future meetings.

Technical Analysis

* Technical Breakout: : EURUSD was traded lower following prior retracement from the resistance level 1.09550. MACD which illustrate bearish momentum signal with the formation of death cross suggest the pair to further extend its losses.

* Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the level 1.08850. Conversely, a potential reversal is also to be expected and the price could head back towards 1.09550.

Potential Risks

Looking ahead, investors will be closely watching key data releases, including U.S. Retail Sales, with particular attention on the ECB’s Interest Rate Decision, where the central bank is widely expected to lower its rate.

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Monitoring

Stay updated on US and Eurozone data, central bank updates and any shifts in the US Dollar’s strength by following PU Xtrader’s financial news page.

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