EUR/USD rebounds from 1.1600 despite market caution ahead of US PPI data

FXStreet
Updated
Mitrade
coverImg
Source: DepositPhotos

  • EUR/USD may lose ground as the US Dollar holds ground ahead of Producer Price Index data due on Wednesday.

  • The Trump administration is set to impose a tariff of "a little over 10%" for those smaller countries.

  • EU officials have confirmed that negotiations to avoid US tariffs are still underway, though a retaliatory package is being prepared.

EUR/USD halts its five-day losing streak, trading around 1.1610 during the Asian hours on Wednesday. The pair appreciates despite the stable US Dollar (USD), driven by traders’ caution ahead of the upcoming US Producer Price Index (PPI) later on Wednesday. The Fed Beige Book and Industrial Production will also be eyed.

However, the US Dollar may regain its ground as the US inflation report for June reignited concerns about prolonged high Federal Reserve (Fed) interest rates. The US Consumer Price Index (CPI) rose 2.7% year-over-year in June, matching market expectations. Core CPI came in at 2.9%, just below the 3.0% forecast but still notably above the Federal Reserve’s 2% target.

The market sentiment remains cautious amid rising uncertainty surrounding the tariff outlook. US President Donald Trump sent notified 25 countries of new tariff rates set to take effect on August 1st, including major trading partners Canada, Mexico, and the European Union (EU). However, Trump expressed willingness to further engage in trade discussions, indicating the possibility of negotiating with the European Union (EU) and other key trading partners.

On Tuesday, Trump indicated that send tariff letters soon to smaller countries, including nations in Africa and the Caribbean, per Reuters. Trump further stated that his administration would likely set a tariff of "a little over 10%" for those countries.

Trump’s letter, noting a 30% import tariff to the European Union, has raised concerns at the European Central Bank (ECB), which is now expected to present a more pessimistic outlook next week than it did in June. Despite this, traders remain confident that the ECB will keep interest rates unchanged at its upcoming meeting.

Meanwhile, EU officials have confirmed that negotiations to avoid tariffs are still ongoing. However, a retaliatory package is being prepared nonetheless, potentially targeting up to €72 billion worth of US goods with tariffs, targeting aircraft and alcohol.

* The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

goTop
quote
Do you find this article useful?
Related Articles
placeholder
Dollar and long-term Treasuries fall as Trump intensifies Fed clash; gold gainsThe dollar and long-term U.S. Treasury bonds declined on Tuesday following President Donald Trump’s unprecedented move to dismiss Federal Reserve Governor Lisa Cook.
Author  Mitrade
Aug 26, Tue
The dollar and long-term U.S. Treasury bonds declined on Tuesday following President Donald Trump’s unprecedented move to dismiss Federal Reserve Governor Lisa Cook.
placeholder
Dollar Weakens on Growing Fed Cut Expectations; Bitcoin Hits New Record HighThe U.S. dollar dropped to multi-week lows on Thursday as traders intensified expectations that the Federal Reserve will resume cutting interest rates next month.
Author  Mitrade
Aug 14, Thu
The U.S. dollar dropped to multi-week lows on Thursday as traders intensified expectations that the Federal Reserve will resume cutting interest rates next month.
placeholder
Eurozone Economy Posts Modest Growth in Q2, Faces Headwinds from U.S. TariffsThe eurozone economy saw a slight improvement in the second quarter of 2025, growing by 0.1%, according to Eurostat data released Tuesday. This modest expansion outpaced expectations for flat growth, but still marked a sharp slowdown from the 0.6% expansion recorded in the first quarter.
Author  Mitrade
Jul 30, Wed
The eurozone economy saw a slight improvement in the second quarter of 2025, growing by 0.1%, according to Eurostat data released Tuesday. This modest expansion outpaced expectations for flat growth, but still marked a sharp slowdown from the 0.6% expansion recorded in the first quarter.
placeholder
Stocks Climb, Euro Strengthens After US-EU Trade AccordGlobal equities advanced and the euro strengthened on Monday as the United States and the European Union reached a pivotal trade accord, boosting investor sentiment amid a week packed with crucial central bank meetings by the Federal Reserve and the Bank of Japan.
Author  Mitrade
Jul 28, Mon
Global equities advanced and the euro strengthened on Monday as the United States and the European Union reached a pivotal trade accord, boosting investor sentiment amid a week packed with crucial central bank meetings by the Federal Reserve and the Bank of Japan.
placeholder
EUR/USD rises to near 1.1700 due to Trump’s tariff threats on European UnionEUR/USD halts its three-day losing streak, trading around 1.1700 during the Asian hours on Monday. The pair gains ground as the US Dollar (USD) loses ground due to escalating global trade tensions.
Author  FXStreet
Jul 14, Mon
EUR/USD halts its three-day losing streak, trading around 1.1700 during the Asian hours on Monday. The pair gains ground as the US Dollar (USD) loses ground due to escalating global trade tensions.
Real-time Quote