- EUR/USD steadies as traders await caution ahead of the Eurozone Harmonized Index of Consumer Prices and US NFP data.
- The US Dollar advanced after the PCE report indicated that the Fed may delay rate cuts until at least October.
- Deutsche Bank expects no further rate cuts in the near future.
EUR/USD remains steady after mild gains registered in the previous session, trading around 1.1420 during the Asian hours on Friday. The pair holds ground ahead of the Eurozone Harmonized Index of Consumer Prices (HICP) data due later in the day. Traders will shift their focus toward the United States (US) Nonfarm Payrolls (NFP) due later in the North American session.
The recent US data showed on Thursday that inflation increased in June as tariffs supported prices for imported goods such as household furniture and recreation products. Core US Personal Consumption Expenditure Price Index (PCE) inflation ticked higher in June, rising 0.3% MoM as many market participants had expected. On an annualized basis, PCE inflation accelerated to 2.6% YoY, outrunning the expected hold at 2.5%.
The US PCE report suggests that price pressures would increase in the second half of the year and delay the US Federal Reserve (Fed) from cutting interest rates until at least October. This has provided support for the US Dollar and kept the EUR/USD pair under pressure.
European Union (EU) inflation seems to remain around the European Central Bank (ECB) 2% goal in July, following the release of the Consumer Price Index (CPI) in Germany, France, Italy, and Spain. Germany’s inflation came to 1.8% against the 2% prior, while figures in Italy eased from 1.8% to 1.7%. Prices in France were unchanged at 0.9% above estimates of 0.8% and Spanish inflation rose from 2.3% to 2.7%. Deutsche Bank does not anticipate any further rate cuts and signals that the next move could be a hike by the end of 2026.
