Euro trades flat despite soft European inflation

• EUR/USD treads water despite earlier US Dollar weakness supporting the pair.
• Softer German and French inflation data may reduce pressure on the ECB to maintain an aggressively restrictive stance.
• Trump’s warning that the Iran ceasefire is “over” is lifting geopolitical uncertainty and limiting the Euro’s gains.

EUR/USD trades in a muted fashion near the 1.1430 area on Friday, as a weaker US Dollar (USD) helps the pair hold onto modest Thursday gains. That was true even after inflation data from Germany and France showed limited price pressure.

Germany’s Consumer Price Index (CPI) fell 0.3% MoM in June, while the annual rate remained unchanged at 2.3%. The Harmonized Index of Consumer Prices (HICP) declined 0.2% MoM and rose 2.4% YoY. In France, the EU-harmonized CPI fell 0.3% on the month and increased 2.0% from a year earlier.

The readings suggest that inflation in two of the Eurozone’s largest economies remains relatively contained. This could reduce the need for the European Central Bank (ECB) to maintain an aggressively restrictive policy stance, limiting the Euro’s upside.

Meanwhile, geopolitical uncertainty remains in focus. United States (US) President Donald Trump said on Truth Social that Iran had requested further negotiations and that Washington had agreed to continue talks. However, Trump also warned that the ceasefire was “over,” raising concerns that hostilities could intensify despite ongoing diplomatic contact.

Renewed tensions between the US and Iran may support safe-haven demand for the Greenback and keep EUR/USD gains limited. Still, the pair holds onto meager gains from Wednesday and Thursday as broader US Dollar weakness offsets the impact of softer European inflation data.

Short-term technical analysis:

On the 4-hour chart, EUR/USD trades at 1.1433, holding above the 20-period Simple Moving Average (SMA) at 1.1425 and the 100-period SMA at 1.1415, which provide near-term trend support but leave the pair capped by a dense band of overhead levels. Price is already testing the lower edge of this cap, with nearby horizontal resistances at 1.1442, 1.1450 and 1.1461 limiting upside attempts, while the Relative Strength Index (RSI) around 52 hints at steady but not aggressive bullish momentum, reinforcing a mildly capped tone as long as these barriers remain intact.

On the downside, initial support is seen at the horizontal floor at 1.1431, followed by the 20-period SMA at 1.1425 and the 100-period SMA at 1.1415, which together form a compact demand zone that would need to give way to signal a deeper pullback. On the topside, immediate resistance comes first at 1.1442, ahead of 1.1450 and then 1.1461, and only a sustained break above this ascending cluster would open the door for a more constructive recovery in the pair.

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