Euro remains on the defensive as softer US PPI offers little relief
- EUR/USD remains under pressure near its lowest level since May 2025.
- Fed officials signal additional interest rate hikes may be needed to bring inflation under control.
- ECB rate hike expectations offer limited support as markets favour further Fed tightening.
EUR/USD remains on the back foot on Friday as the latest US producer inflation data draws little market reaction. The pair hovers near its lowest level since May 2025 as bets on further Federal Reserve (Fed) tightening continue to support the US Dollar (USD).
At the time of writing, EUR/USD trades around 1.1050 and is on track for a third straight weekly loss. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades near 103.20, just below the 19-month high of 103.30 it touched earlier.
The Producer Price Index (PPI) rose 0.3% MoM in October, below the 0.4% forecast and down from 1.4% in September. Annual producer inflation picked up to 6.5% from 6.3%, just below the 6.6% forecast. Core PPI rose 0.3% MoM and 5.0% YoY, both in line with expectations.
The report did little to temper the rate hike bets that built this week after hotter-than-expected US consumer inflation and calls from Fed officials for further tightening. According to the CME FedWatch Tool, traders are fully pricing in a 25-bps rate hike in December and a small chance of a 50 bps increase. Markets also expect another hike in January.
Chicago Fed President Austan Goolsbee said on Friday that inflation would determine the path of interest rates and that the Fed still “has work to do” to bring it down. Earlier this week, Dallas Fed President Lorie Logan called for “at least two more 25-basis-point rate increases.” Before Tuesday’s CPI release, Fed Governor Christopher Waller said a 50-basis-point (bps) hike in December could be warranted if October core CPI rose around 0.3% or more. The reading came in at 0.3%.
Higher energy costs add to the risk that inflation remains elevated for longer. Oil prices have rebounded from recent lows after US President Donald Trump said on Thursday that Washington did not need a deal with Iran to end the war.
On the Eurozone side, preliminary data showed that Gross Domestic Product (GDP) grew 0.4% QoQ and 1.3% YoY in the third quarter, both in line with forecasts. Employment was flat on the quarter, missing expectations for a 0.2% increase, while annual employment growth slowed to 0.4% from 0.5%.
The European Central Bank (ECB) reiterated this week that it would set rates meeting by meeting as it assesses how higher energy costs feed through to wages and other prices. All 71 economists in Thursday’s Reuters poll expect the ECB to raise its deposit rate by 25 basis points to 2.75% in December. Most see it as the final hike of the cycle, while 25 expect another increase, most likely in early 2027.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.07% | 0.02% | 0.00% | -0.10% | 0.24% | 0.17% | 0.27% | |
| EUR | -0.07% | -0.06% | -0.05% | -0.17% | 0.15% | 0.09% | 0.19% | |
| GBP | -0.02% | 0.06% | 0.00% | -0.11% | 0.21% | 0.16% | 0.25% | |
| JPY | 0.00% | 0.05% | 0.00% | -0.10% | 0.23% | 0.16% | 0.26% | |
| CAD | 0.10% | 0.17% | 0.11% | 0.10% | 0.33% | 0.26% | 0.36% | |
| AUD | -0.24% | -0.15% | -0.21% | -0.23% | -0.33% | -0.06% | 0.03% | |
| NZD | -0.17% | -0.09% | -0.16% | -0.16% | -0.26% | 0.06% | 0.11% | |
| CHF | -0.27% | -0.19% | -0.25% | -0.26% | -0.36% | -0.03% | -0.11% |
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 US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Author
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
