EUR/USD stalls with traders awaiting US CPI and US-China headlines
- EUR/USD retreats from 1.1447 high, trading flat near 1.1423 on Tuesday.
- US-China trade talks in London are described as “good” but lack concrete progress.
- ECB officials signal end of easing cycle; await clarity on tariff impact.
- US CPI data and ECB’s Wage Tracker could drive the next major move.
EUR/USD remains stable during Tuesday’s North American session as investors await updates on US-China trade talks in London and the release of the latest inflation figures in the United States (US). At the time of writing, the pair is trading at 1.1423, virtually unchanged.
Washington and Beijing continued their second day of discussions, which, despite being touted as “good” by US President Donald Trump, are failing to sustain traders’ upbeat mood. Meanwhile, speculation that both sides would reach common ground to ease tensions boosted the US Dollar (USD).
Among the themes discussed between the two parties are rare earths, chip exports and student visas. In the meantime, traders digested the latest data releases, as small business sentiment in the US improved, as revealed by the National Federation of Independent Business (NFIB) Optimism Index.
Across the pond, the Eurozone Sentix Investor's Confidence improved in June, as the index turned positive for the first time in the year. European Central Bank (ECB) officials crossed the wires, with Yannis Stournaras saying that stable European Union (EU) policy drew investors towards the Euro.
ECB’s Boris Vujcic said that they couldn’t say if US tariffs are disinflationary or inflationary, adding that the ECB could await new projections. ECB’s Olli Rehn favors the idea of a meeting-by-meeting approach, and Francois Villeroy commented that the ECB has successfully normalized policy.
Therefore, the recent twist on Villeroy's comments, along with President Christine Lagarde's comments that rates are near the end of the easing cycle, could push the EUR/USD higher.
Traders' eyes are on the US inflation report, ECB speakers and Wage Tracker.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the strongest against the British Pound.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.23% | 0.25% | 0.06% | -0.03% | -0.31% | -0.37% | 0.11% | |
| EUR | 0.23% | 0.46% | 0.28% | 0.18% | -0.06% | -0.15% | 0.32% | |
| GBP | -0.25% | -0.46% | -0.10% | -0.27% | -0.51% | -0.61% | -0.14% | |
| JPY | -0.06% | -0.28% | 0.10% | -0.09% | -0.42% | -0.49% | -0.07% | |
| CAD | 0.03% | -0.18% | 0.27% | 0.09% | -0.30% | -0.34% | 0.14% | |
| AUD | 0.31% | 0.06% | 0.51% | 0.42% | 0.30% | -0.09% | 0.39% | |
| NZD | 0.37% | 0.15% | 0.61% | 0.49% | 0.34% | 0.09% | 0.48% | |
| CHF | -0.11% | -0.32% | 0.14% | 0.07% | -0.14% | -0.39% | -0.48% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
Daily digest market movers: EUR/USD trade choppy ahead of US inflation report
- The US NFIB Optimism Index climbed from 95.8 in April to 98.8 in May, surpassing its long-term average. This marked the end of a four-month decline in sentiment and conditions for US small businesses, which had been weighed down by uncertainty surrounding tariffs.
- The US Consumer Price Index (CPI) is expected to climb by 2.5% YoY in May, up from 2.3%, while Core CPI, which excludes food and energy, is expected to edge higher from 2.8% to 2.9% YoY, signaling stickier inflationary pressures.
- The EU’s Sentix Confidence Index improved by 0.2% in June after plunging to -8.1 in May and -19.5 in April.
- Financial market players do not expect that the ECB would reduce its Deposit Facility Rate by 25 basis points (bps) at the July monetary policy meeting.
Euro technical outlook: EUR/USD clings to 1.1400 as buyers lose steam
EUR/USD price action suggests the uptrend remains in play, but so far, buyers have failed to clear the 1.15 figure, which would immediately expose the current year-to-date (YTD) high of 1.1572. Momentum, as measured by the Relative Strength Index (RSI), suggests that consolidation lies ahead, as buyers take a respite.
On the other hand, bears would step in if EUR/USD drops below the 20-day Simple Moving Average (SMA) of 1.1331, clearing the path for a challenge of 1.13 and the 50-day SMA at 1.1281.
US-China Trade War FAQs
Generally speaking, a trade war is an economic conflict between two or more countries due to extreme protectionism on one end. It implies the creation of trade barriers, such as tariffs, which result in counter-barriers, escalating import costs, and hence the cost of living.
An economic conflict between the United States (US) and China began early in 2018, when President Donald Trump set trade barriers on China, claiming unfair commercial practices and intellectual property theft from the Asian giant. China took retaliatory action, imposing tariffs on multiple US goods, such as automobiles and soybeans. Tensions escalated until the two countries signed the US-China Phase One trade deal in January 2020. The agreement required structural reforms and other changes to China’s economic and trade regime and pretended to restore stability and trust between the two nations. However, the Coronavirus pandemic took the focus out of the conflict. Yet, it is worth mentioning that President Joe Biden, who took office after Trump, kept tariffs in place and even added some additional levies.
The return of Donald Trump to the White House as the 47th US President has sparked a fresh wave of tensions between the two countries. During the 2024 election campaign, Trump pledged to impose 60% tariffs on China once he returned to office, which he did on January 20, 2025. With Trump back, the US-China trade war is meant to resume where it was left, with tit-for-tat policies affecting the global economic landscape amid disruptions in global supply chains, resulting in a reduction in spending, particularly investment, and directly feeding into the Consumer Price Index inflation.
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
