- With the recent decline of the US dollar, EUR/USD pairs are trending higher.
- The US producer price index dropped by 0.5% month-over-month, while the core PPI (excluding food and energy) decreased by 0.4% in April.
- However, gains for the euro may be limited as European Central Bank officials hint at potential interest rate cuts.
The EUR/USD pair has recovered from daily drops, hovering around 1.1200 during Asian trading hours on Friday. This rebound follows recent economic reports that showed a weakening US dollar.
In April, the Producer Price Index (PPI) in the US increased by 2.4% year-on-year, slightly down from the 2.7% rise in March, which was also lower than the expected 2.5%. The core PPI, which excludes volatile food and energy prices, showed a 3.1% annual increase, down from 4%. Month-over-month, both the PPI and core PPI experienced declines of 0.5% and 0.4%, respectively.
According to the U.S. Department of Labor, initial unemployment claims for the week ending May 10 reached 229,000, aligning with previous adjustments and expectations. Meanwhile, ongoing claims rose by 9,000, totaling 8.881 million for the week ending May 3.
Traders will be watching the University of Michigan’s Consumer Sentiment Index, which is set to be released on Friday. Market expectations predict that consumer sentiment will reflect a decline for the fourth consecutive month, dropping to 52.2—marking the lowest level in two years. Investors are looking for signs of recovery that could boost the index back to 53.4.
The euro is likely to face pressure as ECB officials continue to mention the possibility of further interest rate cuts in light of declining inflation trends. ECB policymakers, including François Villeroy de Galhau of the Bank of France, have pointed out that US administration measures could exacerbate economic inflation rather than benefitting Europe, prompting potential rate cuts as early as this summer.
In addition, the first-quarter Eurozone GDP growth has been adjusted down from an initial estimate, showing a slight dip from 0.4%. Yearly growth held steady at 1.2%, matching predictions. Interestingly, employment numbers for January to March showed a 0.3% increase—a revision from earlier estimates of just 0.1%.
