EUR/USD remains trapped below 1.1470 as softer U.S. inflation limits dollar demand
EUR/USD is trading near 1.1430 after another unsuccessful attempt to break above the 1.1465 to 1.1470 resistance zone. The dollar has lost some momentum following a weaker-than-expected U.S. inflation report.
Headline CPI fell 0.4% month on month in June, while annual inflation slowed to 3.5% from 4.2%. Core inflation was unchanged on the month and eased to 2.6% year on year, reducing expectations that the Federal Reserve will need to tighten policy again in the near term.
Resilient U.S. activity prevents deeper dollar weakness
The latest activity data have nevertheless prevented a more pronounced EUR/USD advance. U.S. retail sales increased 0.2% in June, while initial jobless claims fell to 208,000, below market expectations. These figures suggest that consumer demand and labor market conditions remain relatively stable despite softer inflation. Treasury yields also remain elevated, with the 10-year yield recently trading around 4.58%, providing the dollar with some underlying support.
ECB faces renewed energy-driven inflation risks
The euro is receiving partial support from eurozone inflation, which remained above the European Central Bank’s target. Headline inflation reached 2.8% in June, while the core measure stood at 2.4%. The ECB must balance these persistent price pressures against weak regional growth and renewed risks from higher oil and natural gas prices. Its latest projections point to eurozone growth of only 0.8% in 2026, suggesting that policymakers are unlikely to adopt a significantly more restrictive stance without further evidence of persistent inflation.
Technical structure remains range-bound
The hourly chart shows EUR/USD consolidating inside a broad 1.1390 to 1.1470 range. The pair recently tested the upper boundary but failed to hold above it, confirming that sellers remain active near 1.1465 to 1.1470. Price is now trading close to the short and medium-term moving averages, highlighting a lack of clear directional momentum. Initial support is located near 1.1420, followed by 1.1390. A break below the lower boundary would expose the 1.1360 area.
Break above resistance remains essential
Near-term prospects remain neutral while EUR/USD stays inside the current range. Softer U.S. inflation may continue to limit dollar demand, although resilient economic data, elevated Treasury yields and geopolitical uncertainty could prevent a sustained euro rally. Only a confident break above 1.1470 would improve the short-term outlook and open the way toward 1.1500 and 1.1520. Until then, further sideways, as written in EUR/USD tests breakout zone as markets reassess Fed outlook, trading remains the most likely scenario.
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