Euro gains as US Dollar retreats despite firm PCE inflation, German sentiment improves slightly

• EUR/USD trades slightly higher as USD weakens despite solid US economic data.
• US PCE inflation rose to 4.1% YoY in May, while core PCE increased 3.4% YoY, both matching market expectations.
• US labor and growth data remained resilient, with Jobless Claims falling to 215K and Q1 GDP revised up to 2.1%.

The EUR/USD pair elevated slightly near 1.1380 trades with mild gains on Thursday, as the US Dollar (USD) loses momentum despite a fresh batch of United States (US) economic data showing sticky inflation, stronger growth, and resilient labor market conditions.

Annual inflation in the United States, measured by the Personal Consumption Expenditures (PCE) Price Index, climbed to 4.1% in May from 3.8% in April, according to the US Bureau of Economic Analysis. The reading came in line with market expectations. In the same period, the core PCE Price Index, which excludes volatile food and energy prices, rose by a tenth of a percentage point to 3.4% YoY, also matching forecasts.

Earlier in the day, US data showed that Initial Jobless Claims fell to 215K in the week ending June 20, below expectations and down from the previous revised 227K reading. Meanwhile, the final estimate of first-quarter US Gross Domestic Product (GDP) showed the economy expanding at an annualized rate of 2.1%, revised higher from the previous estimate of 1.6%.

On the Eurozone side, German sentiment data offered modest support to the Euro as the GfK Consumer Confidence Survey for July improved slightly to -29.2 from a revised -29.7, although the reading remained weak.

Short-term technical analysis:

On the 4-hour chart, EUR/USD trades at 1.1380, maintaining a bearish near-term bias as it remains below both the 20-period Simple Moving Average (SMA) at 1.1383 and the 100-period SMA at 1.1521. Short-term price action is pressing against immediate overhead supply clustered around the 20-period SMA and the nearby horizontal resistance at 1.1388, while the Relative Strength Index (RSI) has recovered toward the mid-40s, hinting at stabilizing momentum but not yet signaling a decisive bullish shift.

On the downside, initial support emerges at 1.1360, with further floors at 1.1336 and 1.1324 if selling pressure resumes. On the topside, a break above the tight resistance band formed by the 20-period SMA at 1.1383 and the 1.1388 horizontal barrier would be needed to ease immediate downside pressure, while the 100-period SMA at 1.1521 remains a more distant cap on any sustained recovery attempts.

(The technical analysis of this story was written with the help of an AI tool.)