EUR/USD Nears 1.1200 as US Dollar Weakens Ahead of UoM Sentiment Data

EUR/USD Climbs Toward 1.1200 as US Dollar Weakens; UoM Data in Focus

The EUR/USD pair rose toward the 1.1200 level during Friday’s Asian session, supported by a weaker US Dollar following softer-than-expected inflation data. The US Producer Price Index (PPI) declined by 0.5% month-on-month in April, while core PPI fell 0.4%, indicating cooling inflationary pressures. On a yearly basis, headline PPI rose 2.4%, below forecasts, and core PPI rose 3.1%, down from 4.0% previously.

The weaker data weighed on the US Dollar and helped the Euro recover from earlier losses. However, the Euro’s upside remains capped as European Central Bank (ECB) officials continue to suggest the possibility of rate cuts amid slowing inflation in the eurozone. ECB policymaker François Villeroy de Galhau remarked that US protectionist measures may revive inflation in America but not in Europe, clearing the way for monetary easing.

Eurozone GDP growth was revised slightly lower to 0.3% quarter-on-quarter in Q1 2025, from the initial 0.4% estimate, while employment data came in stronger than expected.

Meanwhile, traders are closely watching the upcoming release of the University of Michigan (UoM) Consumer Sentiment Index. After four consecutive months of declines, the index is expected to improve modestly to 53.4 from 52.2.

The combination of soft US inflation data and cautious ECB signals is creating a mixed outlook for the EUR/USD pair, with further movement likely driven by incoming sentiment and inflation indicators.