The US Economy Continues to;Shrink April Core PCE Index to be Released; Will EUR/USD Sustain its Uptrend?

Tradingkey - The US economic performance has been lackluster, with the first-quarter economy contracting at an annualized rate of 0.2%, which was worse than expected, primarily due to a surge in imports before tariffs and weak consumer spending. Notably, the PCE inflation index, which the Federal Reserve closely monitors, is set to be released tonight Eastern Time, potentially putting further pressure on the US Dollar index. The EUR/USD pair experienced a decline before rebounding yesterday, continuing its recent trend of oscillating upward. The trend may continue to strengthen in the future, testing the 1.15 level.

Data from the US Commerce Department's Bureau of Economic Analysis shows that the US economy contracted at an annualized rate of 0.2% in the first quarter, underperforming expectations. This figure is a slight upward adjustment from the previous initial estimate of a 0.3% contraction. The recent economic downturn is mainly attributed to companies stockpiling goods before President Trump announced large-scale tariffs, leading to a surge in imports. Meanwhile, inventory investment and consumer spending failed to offset the negative effects of imports.

Chicago Federal Reserve President Austan Goolsbee stated that if a solution to trade policy allows the US economy to return to pre-tariff trajectories, officials could consider lowering interest rates; if full employment and inflation targets are achieved, rates could be reduced to appropriate levels. The Federal Reserve plans to maintain interest rates unchanged this year to wait for uncertainties related to tariffs and other policies to resolve.

European Central Bank President Christine Lagarde mentioned that President Trump's erratic policies have provided a "wonderful opportunity" to strengthen the euro's international standing, allowing the Eurozone to enjoy more privileges that the US has kept. In the face of $35 trillion in US debt and the weaponization of the dollar, the world is accelerating its de-dollarization efforts, with Europe aiming to create an autonomous clearing system separate from Washington.

The US Commerce Department will release the April Core PCE Price Index year-on-year tonight, with a previous value of 2.6% and an expected value remaining unchanged. The Core PCE data better reflects the consumption habits of US consumers and represents changes in the inflation rate, serving as an important reference for the Federal Reserve when adjusting monetary policy. JPMorgan warned that if the Core PCE month-on-month growth exceeds 0.4%, the Federal Reserve may be forced to make a difficult decision between inflation and recession.

EUR/USD Technical Analysis

Source: Mitrade EUR/USD Trend

On the technical front, the EUR/USD pair has shown a recent oscillating upward movement, continuing its earlier upward trend, with market bulls still in control. Currently, various moving averages are converging, indicating that the directional trend is becoming unclear. In the KD indicator, both lines are above the 50 level but are turning downward, suggesting strong bearish pressure from above, indicating short-term correction pressure; however, the overall oscillating upward trend remains intact. In the future, the pair is expected to maintain an oscillating upward trend, with short-term support at the 1.1300 level.

Initial resistance for EUR/USD is located at 1.1500, with further resistance at 1.1600 and a key resistance level at 1.1650. Initial support for EUR/USD is found at 1.1300, with further support at 1.1250 and a more critical support at 1.1150.