EUR/USD Slides Toward 1.1600 Ahead of Key Eurozone Inflation Data

EUR/USD Slides Toward 1.1600 Ahead of Key Eurozone Inflation Data

The EUR/USD currency pair came under renewed pressure during Thursday’s Asian session, dropping to around 1.1620 as traders turn cautious ahead of the release of the Eurozone Harmonized Index of Consumer Prices (HICP) data due later today. The pair is now trending toward the key 1.1600 support level.

Market Focus Turns to Eurozone Inflation and US Retail Sales

Investors are waiting for fresh inflation data from the euro area to assess the European Central Bank’s (ECB) next moves. The HICP, a key measure of price pressure in the region, is expected to influence the near-term direction of the euro. Later in the day, attention will shift to US Retail Sales data for June, which could provide new insight into the strength of the US consumer.

US Dollar Supported by Fed Caution and Risk Sentiment

The US Dollar (USD) remains firm as market participants increasingly believe that the Federal Reserve (Fed) will hold its interest rate steady at 4.25%–4.50% during the July policy meeting. This is largely due to growing global trade uncertainty and softer inflation data, which gives the Fed room to wait and assess further economic developments.

Trump's Tariff Comments Add to Caution

Adding to the cautious tone, US President Donald Trump stated on Wednesday that he plans to send a letter to more than 150 countries, imposing a 10% tariff rate on them. He clarified that these are smaller economies with minimal trade ties to the US. Trump also suggested the rate could be raised to 15–20%, although no specifics were confirmed.

These tariff threats increase overall market risk aversion, which typically supports the US dollar and weighs on risk-sensitive currencies like the euro.

Outlook for EUR/USD

If the upcoming Eurozone HICP data comes in below expectations, the euro may weaken further, potentially pushing EUR/USD below 1.1600. Conversely, a strong reading could offer temporary support. The market will also closely monitor the US Retail Sales report later in the North American session for cues on consumer strength and future Fed policy.

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