EUR/USD Forecast: Dollar soars alongside US inflation

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2082

US inflation soared to 4.2% YoY in April, boosting speculation of a tighter monetary policy.
Government bond yields jumped to their highest in almost a month.
EUR/USD trades at fresh weekly lows and could keep falling in the near-term.

The American dollar edged higher across the FX board, following the release of upbeat US data. The country’s Consumer Price Index hit 4.2% YoY, higher than the 3.6% expected. The core reading jumped to 3%, also surpassing expectations. The EUR/USD pair pierced the 1.2100 threshold with the news, now trading around 1.2065, its daily low. Higher inflation in the US sent stocks sharply lower and US Treasury yields higher, with that on the 10-year note hitting 1.69%. Speculative interest priced in persistent higher inflation will end up forcing the US Federal Reserve to begin with tightening earlier than expected.

Across the ocean, the European macroeconomic calendar was scarce. Germany published April inflation figures, which showed that the annual CPI was up 2% as expected. Most European markets will be closed this Thursday amid Ascension Day. The US will publish the April Producer Price Index and Initial Jobless Claims, foreseen at 490K for the week ended May 7.

EUR/USD short-term technical outlook

The EUR/USD pair has room to extend its decline in the near-term. The 4-hour chart shows that the pair is currently struggling around its 100 SMA, which maintain a modest bullish slope. The 20 SMA is turning lower well above the current level, indicating increasing selling pressure. Technical indicators have bounced modestly from intraday lows but lack strength enough to confirm an upcoming recovery. The pair could extend its slide below 1.2000 if the dismal mood persists.

Support levels: 1.2060 1.2025 1.1980

Resistance levels: 1.2110 1.2150 1.2190

View Live Chart for the EUR/USD

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

GBP/USD remains in two-day highs around 1.3260

GBP/USD adds to Friday’s bounce, gathering fresh traction and flirting with the 1.3270 zone on Monday, or two-day tops. Cable’s decent advance comes despite the move higher in the Greenback and investors’ assessing of UK PM K. Starmer's resignation.

EUR/USD remains offered; focus is on 1.1400

EUR/USD rapidly gives back Friday’s rebound and trades with marked losses near 1.1420, or three-month lows, in the latter part of Monday’s NA session. The pair’s intensifies its retracement following the continuation of the robust upside momentum in the US Dollar. Next on tap will be preliminary PMIs the Germany and the Euroland.

Gold trades below $4,200 on hawkish Fed bets, bullish USD

Gold struggles to capitalize on the previous day's modest gains and edges lower during the Asian session on Tuesday. Firming expectations for a Fed rate hike and geopolitical uncertainties help the US Dollar to stand firm near its highest level since May 2025, undermining bullion. However, bearish Oil prices ease concerns about inflation and prospects for more aggressive tightening by central banks, which should limit losses for the yellow metal.

NYSE parent ICE, OKX partners to expand tokenized equities and digital asset markets

The New York Stock Exchange parent company, Intercontinental Exchange, and crypto exchange OKX have formed a joint venture to develop infrastructure for tokenized and blockchain-native financial products, according to a statement on Monday. The venture will seek to operate as a US-registered broker-dealer and futures commission merchant, subject to regulatory approvals.

Is Shiba Inu dead or just in a crisis? The data behind SHIB's 95% crash

SHIB, the dog-themed meme coin that became one of the biggest success stories in crypto and turned early buyers into crypto millionaires, is facing tough times. Its price has fallen more than 32% so far this year, and it is down 95% from its all-time high in 2021. Is SHIB simply another fading meme coin, or is the market overlooking a possible recovery story?

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.