The EUR/USD pair maintained its strength near 1.0900 on Friday, even as hotter-than-expected US Producer Price Index (PPI) data for June challenged the narrative of an imminent Federal Reserve (Fed) pivot towards interest rate cuts.

Market Reactions and Outlook

While the stronger PPI figures raised concerns about persistent inflation, the pair’s resilience can be attributed to several factors:

• Softer Consumer Inflation: The June Consumer Price Index (CPI) showed a larger-than-expected deceleration, reinforcing expectations of a September rate cut.
• ECB Caution: The European Central Bank (ECB) is hesitant to commit to a pre-defined rate cut path, fearing a resurgence of inflation. This has helped stabilize the Euro.
• Diminishing French Financial Crisis Fears: Easing political tensions in France, following the far-right’s failure to secure a majority, have further boosted the Euro.

Technical Analysis: Bullish Breakout Remains Intact

The EUR/USD pair has broken out of a Symmetrical Triangle formation on the daily timeframe, signaling a continuation of the bullish trend. The pair is currently hovering near the upper boundary of this pattern around 1.0880.

The 20-day Exponential Moving Average (EMA) at 1.0800 continues to provide support, while the 14-day Relative Strength Index (RSI) remains in the bullish range, indicating sustained upward momentum.

Key Points:

• EUR/USD holds firm despite hotter-than-expected US PPI data.
• Conflicting inflation signals create uncertainty about the Fed’s policy trajectory.
• ECB’s cautious stance and easing political risks in France support the Euro.
• Technical analysis confirms a bullish breakout, with the potential for further upside.