EURUSD ends the week close to where it started, sideways

• EUR/USD rose to 1.0880 following better-than-expected EU IPCH inflation data.
• The pair retreats to the week's opening bids as the close approaches.
• Next week: EU and US PMIs, ECB rate decision, US NFP

EUR/USD struggled to advance on Friday, wavering near 1.0850 as the major pair heads to close within range of the week's opening bids on Monday. Europe's Harmonized Index of Consumer Prices (HICP) inflation rose faster than expected in May, while US Personal Consumption Expenditure Price Index (PCE) inflation cooled faster than expected expected in April. Next week brings a data-heavy agenda, with Purchasing Managers' Index (PMI) numbers on both sides of the Atlantic, followed by an expected European Central Bank (ECB) rate decision and another Non-Farm Payrolls report. (NFP) from the US next Friday.

Pan-European IPCH core inflation rose 2.9% month-on-month in May, above the average market forecast of 2.8% and extending from 2.7% in the previous month. A sharp drop in German retail sales in April capped gains for the Euro after consumer activity declined -1.2% mom vs. -0.1% expected. However, the previous period saw a sharp upward revision to 2.6% from the initial 1.8%.

EUR/USD rose to an intraday high above 1.0880 in European markets but retreated during the US market session after US Personal Consumption Expenditure (PCE) Price Index inflation cooled to 0.2% month-on-month in April. The figure comes in below the expected 0.3%, driven by a sharp slowdown in US personal spending figures, which fell to 0.2% compared to the 0.3% forecast and falling further from the revised 0.7% of the Previous period.

The ECB meets next week for another rate decision, with markets increasingly expecting a first quarter-point cut from EU central planners after the ECB steadily raised its core operating rate. refinancing from 0.0% in June 2022 to 4.5% in September 2023.

US ISM PMI numbers for May next Monday are expected to recover to 49.8 from 49.2. Next Friday's US NFP employment numbers loom, and median market forecasts currently expect 180,000 net new additions to the US labor market in May.

EUR/USD Technical Outlook

EUR/USD spent the week consolidating around a mid-range near 1.0850 as the pair moves just north of the 200-day EMA at 1.0793. The daily candlesticks are showing signs of bullish exhaustion and the pair could be ready for a bearish break towards the 1.0600 level. Despite a 2.8% recovery from the latest low, EUR/USD is still down -1.6% from 2024 opening bids near 1.1035.

EUR/USD Daily Chart