EUR/USD failed to sustain around its two-week high as the euro area trade balance moved into deficit in April, according to latest data from Business Standard. The trade balance showed a shortfall of EUR 1.0 billion compared to a surplus of EUR 4.9 billion in March, a dramatic reversal from the EUR 8.7 billion surplus recorded in the same period last year. This weighed on the single currency while the US dollar index edged up as currency market participants eyed further clarity on the US-Iran peace deal. The EUR/USD pair is currently quoting at 1.1626, down 0.09% on the day, reflecting the impact of the trade data on euro sentiment.
EUR/USD is edging higher towards 1.1550 ahead of the ECB's interest rate decision at 12:15 GMT, according to reports from Investing.com India. The ECB is widely expected to raise rates by 25 basis points to 2.25% as it continues to battle inflation. Eurozone inflation rose to 3.2% in May, while core inflation remained elevated at 2.5%, both measures well above the ECB's 2% target. Alongside the rate decision, the ECB will publish updated economic forecasts, with inflation projections for 2026 and 2027 expected to be revised higher due to elevated energy prices and Middle East uncertainty. As per Business Standard, the EUR/USD pair is down 0.19% at 1.1529 as of latest trading, reflecting cautious positioning ahead of the policy announcement.
EUR/USD broke out of its symmetrical triangle pattern, breaking below the 200 SMA, as reported by Investing.com India. Failure to take these dynamic resistance points reinforced the bearish bias, with the price falling to support at 1.15. Sellers supported by the RSI below 50 will look to break below 1.15 to extend the bearish move to 1.1450 and 1.1410. Any recovery needs to rise above 1.16 resistance to bring 1.1680 into focus, the 50 and 200 SMA, with buyers potentially gaining traction towards 1.18, the May high. On the domestic front, EUR/INR futures are up 0.32% at 110.63 on NSE, indicating some resilience in the euro against the rupee despite broader dollar strength.
Gold is struggling to build on a modest rebound after falling to its lowest level since November last year, as reported by Investing.com India. The U.S. dollar is trading slightly lower after yesterday's CPI report showed some easing in underlying inflation pressures. Core CPI rose 0.2% in May, down from 0.4% in April and below the 0.3% forecast, easing concerns that inflation pressures are accelerating. However, headline CPI accelerated to a three-year high of 4.2%, driven largely by a sharp rise in energy prices. With the Strait of Hormuz still effectively closed and the U.S. carrying out fresh strikes on Iranian targets, oil prices have rebounded from two-month lows.
Markets continue to expect a hawkish Fed, with investors currently pricing around a 70% probability of a rate hike before the end of the year, according to Investing.com India. Higher interest rates and rising Treasury yields tend to weigh on non-yielding assets such as gold while supporting the U.S. dollar. Attention now turns to U.S. producer price inflation (PPI), which is expected to rise to 6.4% from 6.0%. A stronger-than-expected reading could reinforce concerns that inflation pressures remain persistent, pushing Treasury yields higher and supporting the dollar.
