EUR/USD holds near $1.162 as traders await Eurozone PMI and U.S. inflation data

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Eurozone PMI and U.S. inflation

Highlights

- The euro trades around 1.1618, heading for a 0.4% weekly decline.

- Traders eye Eurozone PMI and U.S. CPI data for near-term direction.

- Key support rests at 1.1615 and 1.1540, while resistance holds near 1.1680–1.1700.

The dollar remains well-supported as investors brace for another inflation uptick in the U.S. Consumer Price Index, expected to exceed the 3% year-on-year threshold. A stronger reading could reaffirm the dollar’s position even as markets anticipate a Federal Reserve rate cut next week.

Meanwhile, the euro’s inability to capitalize on weaker U.S. Treasury yields underscores the currency’s fragile footing. The Eurozone’s preliminary PMI data, due later Friday, will offer insight into the region’s economic pulse, with consensus forecasts suggesting a further slowdown in manufacturing and services. Any downside surprise could reinforce pressure on the European Central Bank to maintain an accommodative stance, further dimming the euro’s appeal.

Political developments have added a layer of uncertainty. Renewed trade friction between the U.S. and China resurfaced after reports that Washington may restrict software exports to Beijing. President Donald Trump confirmed his meeting with Chinese President Xi Jinping remains on schedule but reiterated that “all options remain open” on tariffs. At the same time, tensions between the U.S. and Canada over auto exports have contributed to risk aversion across the broader currency market.

Technical picture: Fragile range holds

From a technical standpoint, EUR/USD remains locked in a narrow consolidation zone. The pair is hovering near its 0.236 Fibonacci retracement at 1.1628, after multiple failures to clear the 1.1680–1.1700 barrier—aligned with the 38.2% retracement and the 200-day exponential moving average (EMA). The 20-day EMA at 1.1627 and 50-day EMA at 1.1645 form a tight cluster of overhead resistance. Unless buyers reclaim these levels, the pair remains vulnerable to further weakness.

EUR/USD price analysis (Source: TradingView)

Support is clearly defined at 1.1615 and the October low of 1.1540. A break below 1.1540 would expose the psychological 1.1500 level and could accelerate downside momentum. On the upside, clearing 1.1665 would open the door to 1.1730 and 1.1835, corresponding to higher Fibonacci retracement levels that define the upper boundary of the current corrective phase.

Momentum indicators remain neutral to bearish, with the relative strength index (RSI) hovering slightly above 50—reflecting indecision and subdued momentum. Volatility remains contained, but a stronger-than-expected U.S. CPI print could quickly tilt sentiment back in favor of the dollar.

Outlook: Data-driven week ahead

As previously discussed, EUR/USD’s trajectory remains tied to macro catalysts rather than technical structure alone. A weak Eurozone PMI or stronger U.S. inflation report could break the pair below the 1.1615 floor and reignite a test of 1.1500. Conversely, a softer U.S. CPI coupled with a modest Eurozone beat might prompt a rebound toward 1.1700, though upside potential appears capped without a clear shift in sentiment.

For now, the euro remains trapped in a narrow, fragile range—reflecting the market’s cautious stance ahead of high-impact data that could redefine the short-term narrative. Traders will be watching whether Friday’s numbers set the stage for renewed dollar dominance or a long-awaited euro rebound into month-end.

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