empty
12.06.2025 12:35 AM
EUR/USD. In the Shadow of the Trade Deal: U.S. Inflation Report Pressures the Greenback

A mixed U.S. inflation report pressured the greenback. The dollar index returned to 98.00, while the EUR/USD pair refreshed its weekly high, rising to 1.1491. Additional pressure on the U.S. currency came from Donald Trump, who disclosed details of the future trade deal with China. The terms of the "truce" were unappealing to dollar bulls despite the enthusiastic commentary from the White House.

This image is no longer relevant

Inflation First

According to the report, the monthly core CPI in May slowed to 0.1% after holding steady at 0.2% for two months (the forecast was for it to remain unchanged). On an annual basis, overall CPI rose to 2.4%, though most analysts had expected a more substantial increase to 2.5%. On the one hand, the growth was minimal (previously 2.3%), but considering that CPI had been declining for three months in a row, even this modest increase is meaningful as it reflects the impact of import tariffs.

The core Consumer Price Index (excluding food and energy) fell to 0.1% month-on-month (versus a 0.3% forecast) and remained at 2.8% year-over-year—matching April and March readings—while analysts had anticipated an increase to 2.9%.

All components of the release landed in the "red zone," falling short of expectations. However, it's worth noting that this was the first acceleration in U.S. inflation in four months.

Breakdown of Price Changes

Housing and service costs were the main contributors to the price rise. The report showed a 3.5% drop in energy prices in May. Clothing prices declined by 0.9%. On the other hand, food prices rose by 2.9%, electricity by 4.5%, medical services by 3.0%, and transportation services by 2.8%. Vehicle prices also climbed: used cars by 1.8% and new cars by 0.4%.

What does this data tell us? First, the full impact of the new tariffs has yet to be reflected in inflation. CPI continued to decline in April despite Trump's new tariff plan taking effect on April 9. The May data showed a slight acceleration year-on-year but fell short of most analysts' expectations.

Second, the May report allows the Federal Reserve to maintain a wait-and-see approach in upcoming meetings—especially after a relatively solid Nonfarm Payrolls report showing a 140K employment increase. Meanwhile, the market is increasingly confident that the Fed will cut rates in early autumn, specifically in September. Following the inflation data release, the probability of a 25-basis-point cut in September rose to nearly 70%, up from less than 60% beforehand. Traders remain almost 100% certain that the Fed won't ease policy in June or July.

I think it's still too early to draw conclusions about September. Three more inflation reports are due before that meeting, and the Fed won't make decisions based on a single data point. Moreover, given Trump's statement, traders may be more concerned about the risks of stagflation than rate cuts.

Impact on EUR/USD

That's precisely why the EUR/USD movement occurred on Wednesday. The inflation report fueled the fire but was not the main reason for the greenback's weakness.

The dollar came under pressure after the U.S. president shared details of the trade agreement with China. According to Trump, the U.S. will impose tariffs on Chinese goods at a 55% rate, while China will maintain only 10% tariffs.

In reality, the tariff structure after the deal will be similar to the current one—following mutual reductions of 115%. Trump added the prior 25% tariffs from his first term to the current 30% rate.

The deal also includes mutual concessions: China will resume rare earth metal exports, and the U.S. will allow Chinese students to continue studying at American universities and colleges.

The London negotiations disappointed dollar bulls because the 55% combined tariff rate on Chinese goods remains intact. This increases the risk of "bad inflation" in the U.S.—inflationary pressure without demand growth. In this context, a rise in overall CPI is bad news for the greenback, especially amid falling ISM indices for both manufacturing and services in May.

Technical Outlook

The current fundamental background supports further growth of the EUR/USD pair. Technical indicators also confirm this: the price remains between the middle and upper Bollinger Bands on the D1 timeframe and above all lines of the Ichimoku indicator, including the Kumo cloud, which continues to display a bullish "Parade of Lines" signal. The first bullish target is 1.1510 (upper Bollinger Band on D1). If buyers consolidate above this level, the next resistance barrier will be 1.1575 (upper Bollinger Band on W1).

Recommended Stories

اے یو ڈی / جے پی وائے : تجزیہ اور پیشن گوئی

بدھ کو ایشیائی سیشن کے دوران، اے یو ڈی / جے پی وائے جوڑی نے ٹھوس فوائد حاصل کیے، جس نے ایک دن پہلے ریکارڈ کی گئی دو ہفتے

Irina Yanina 15:52 2025-07-23 UTC+2

ایکس اے یو / یو ایس ڈی : تجزیہ اور پیشن گوئی

ریاستہائے متحدہ اور جاپان کی خبریں قیمتی دھات کی قیمت کی حرکیات کو نمایاں طور پر متاثر کر رہی ہیں۔ صدر ڈونالڈ ٹرمپ نے جاپان کے ساتھ ایک بڑے تجارتی

Irina Yanina 15:48 2025-07-23 UTC+2

یو ایس ڈی / جے پی وائے : تجزیہ اور پیشن گوئی

جاپانی ین نے اپنے انٹرا ڈے گراوٹ کو روک دیا جب وزیر اعظم شیگیرو ایشیبا نے ان کے استعفے کی تجویز کرنے والی حالیہ میڈیا رپورٹس کی اہمیت

Irina Yanina 15:41 2025-07-23 UTC+2

برطانوی پاؤنڈ/امریکی ڈالر کا جائزہ - 23 جولائی: پاول-ٹرمپ شو ڈاؤن: اصول اور عزت کا معاملہ

منگل کو، برطانوی پاؤنڈ/امریکی ڈالر کرنسی کے جوڑے نے اپنے اوپر کی طرف تعصب کو برقرار رکھا، حالانکہ یہ پورے دن میں نمایاں فائدہ پوسٹ کرنے میں ناکام رہا۔ تاہم،

Paolo Greco 14:12 2025-07-23 UTC+2

یورو/امریکی ڈالر کا جائزہ - 23 جولائی: ڈونلڈ ٹرمپ یورپی یونین کا وعدہ کرتے اور دباؤ ڈالتے رہتے ہیں

منگل کو، یورو/امریکی ڈالر کرنسی کے جوڑے نے اپنے اوپر کی طرف رجحان کے ایک نئے مرحلے کے آغاز کو برقرار رکھا۔ ایک دن پہلے، قیمت موونگ ایوریج لائن

Paolo Greco 14:09 2025-07-23 UTC+2

جی بی پی / جے پی وائے : تجزیہ اور پیشن گوئی

جی بی پی / جے پی وائے پئیر 199.00 کی نفسیاتی سطح سے بالکل نیچے تجارت کرتے ہوئے اپنی اوپر کی حرکت جاری رکھے ہوئے ہے۔ یہ جوڑا کمزور جاپانی

Irina Yanina 20:54 2025-07-22 UTC+2

ایکس اے یو / یو ایس ڈی : تجزیہ اور پیشن گوئی

منگل کو، سونا $3400 کی سطح سے پیچھے ہٹ رہا ہے، جس نے مزاحمت کا کام کیا۔ تاہم، امریکی صدر ڈونلڈ ٹرمپ کی جانب سے نئے محصولات متعارف کرانے

Irina Yanina 14:26 2025-07-22 UTC+2

یورو/امریکی ڈالر کا جائزہ - 22 جولائی: ڈالر کا کوئی امکان نہیں ہے۔

یورو/امریکی ڈالر کرنسی کے جوڑے نے پیر بھر میں زیادہ تجارت کی۔ قیمتوں میں اضافہ صبح سویرے شروع ہوا اور دن کے بیشتر حصے تک برقرار رہا۔ گزشتہ روز بنیادی

Paolo Greco 13:55 2025-07-22 UTC+2

یورو اضافہ کا موقع حاصل کرسکتا ہے

اس جمعرات کو ہونے والے یورپی مرکزی بینک کے آئندہ اجلاس کی تیاری کرنے والے تاجر، جس میں شرح سود کے تعین پر توجہ دی جائے گی، کو مانیٹری پالیسی

Jakub Novak 18:28 2025-07-21 UTC+2

سونا اپنے اضافہ کے رجحان کو دوبارہ شروع کر رہا ہے

پیر کو ایشین سیشن کے آغاز پر سونے کی قیمت میں اضافہ ہوا کیونکہ تاجروں نے امریکی فیڈرل ریزرو کے حکام کے درمیان مختلف آراء کا جائزہ

Jakub Novak 18:24 2025-07-21 UTC+2
ابھی فوری بات نہیں کرسکتے ؟
اپنا سوال پوچھیں بذریعہ چیٹ.
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaTrade anyway.

We are sorry for any inconvenience caused by this message.