Euro elevates as softer US PPI weighs on the Dollar

• EUR/USD rises above1.1460 as softer-than-expected US PPI data weighs on the US Dollar.
• Fed Chair Kevin Warsh welcomed the improving inflation trend but stressed that price data remain imperfect and inflation remains unsatisfactory.
• Spain’s HICP held at 3.6% YoY in June, supporting the Euro by limiting expectations of aggressive ECB easing.

EUR/USD trades higher near the 1.1450 area on Wednesday as the US Dollar (USD) weakens following softer-than-expected United States (US) Producer Price Index (PPI) data. The Euro (EUR) also finds some support after Spain’s Harmonized Index of Consumer Prices (HICP) showed inflation remained elevated in June.

US producer inflation surprised to the downside. Headline PPI fell 0.3% MoM in June, compared with expectations for a flat reading, while the annual rate slowed to 5.5% from 6.0%, below the 6.2% consensus. Core PPI, which excludes food and energy, rose 0.2% MoM, also missing the 0.4% forecast, while the yearly core measure came in at 4.7%, below expectations of 5.2%. The softer data added to expectations that US inflation pressure may be easing, dragging the Greenback lower.

Federal Reserve (Fed) Chair Kevin Warsh also struck a measured tone during his testimony before the US Senate Committee on Banking, Housing and Urban Affairs. Warsh said recent inflation data are “an imperfect gauge of underlying inflation” and added that any central bank is happy when data move in the right direction. He also noted that the labor market is in good shape and broadly in balance, although he said inflation still looks “less good,” suggesting the Fed is not ready to declare victory.

On the Euro side, Spain’s final HICP held at 3.6% YoY in June, unchanged from May, while the monthly reading rose 0.6%. The figures suggest inflation remains sticky in one of the Eurozone’s largest economies, which may help limit expectations for aggressive European Central Bank (ECB) easing.

Short-term technical analysis:

On the 4-hour chart, EUR/USD trades at 1.1451, maintaining a mildly bullish tone as it holds above both the 20-period Simple Moving Average (SMA) at 1.1416 and the 100-period SMA at 1.1408. The pair is testing a nearby pivot at 1.1451 while remaining just under the horizontal resistance barrier at 1.1462, with the Relative Strength Index (RSI) hovering near 59 and hinting at constructive but not yet overbought momentum.

On the downside, immediate support is located at the horizontal pivot around 1.1451, followed by successive structural floors at 1.1442 and 1.1431, before the 20-period SMA at 1.1416 and the 100-period SMA at 1.1408 provide deeper demand. On the topside, a break above the 1.1462 resistance would reinforce the bullish bias and open the way for further gains in the near term.

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