EUR/USD declines as US Dollar gains ahead of US data-packed session

• EUR/USD has fallen near 1.1370 because major eurozone countries have indicated that price pressure has grown moderately.
• The pair collapsed even though the eurozone economy rose to higher than the expected speed of 0.4% in the first quarter of the year.
• Investors are waiting for the US Q1 GDP, PCE inflation for March, and ADP's work change data for April.

EUR/USD Slips near 1.1355 at the time of European trading on Wednesday. The main currency pair dropped as the US Dollar (USD) captured the lead in a US economic data (US) to publish in the North American session. The US dollar index (DXY), which monitors the value of the greenback against six major currencies, ticks up to close to 99.35.

Investors will pay attention to the Q1 GDP, changing working on ADP for April, and personal consumption price (PCE) prices (PCE) for March, which influences market expectations for the Federal Reserve (FED) financial policy view.

The US economy is expected to expand at a moderate speed of 0.4% on an annual basis, which is slower than the 2.4% growth seen in the previous quarter. Meanwhile, working in the private sector and inflation data are expected to show that labor market conditions and price pressure are cooling.

However, the overall perspective of the US dollar remains fierce amid the uncertainty in trade relations between the US and China. Participants in the market are more confident that the warfare war between the two largest powerhouses in the world will not be resolved in the near term, as comments from US Secretary of Treasury Scott Bestent have indicated that he wants Beijing to be one to begin to revolve around the additional duties of importing in Washington. China raised the US levies by 125% in revenge for the 145% tariffs imposed by US President Donald Trump.

On Monday, Scott Bescent said in an interview with CNBC: “I believe that it is up to China to escalate, because they sell five times more of us than we sell to them, and thus these 120%, 145% tariffs are unstable.”

Meanwhile, China has listed many imports from the US to be exempted from tariffs, Reuters reported. Investors should not make this transfer of China as an attempt to escalate the trade war, thinking that these products are that replacements are not available to their domestic facilities due to technological or resource limits.

Daily -Sales Digest Market Movers: EUR/USD Falls while Eurozone Major Economies report Soft Inflation Data

• The downside move to EUR/USD pair is also driven by a slight euro weak Price index (CPI) data from six German and France states, as well as stable inflation in Italy and Spain.
• The annual inflation of the four-year-old German states is lower than the previous reading, while the two states have shown faster price growth. The data suggests that inflation for the whole of Germany, which will be published at 12:00 GMT, can also fall. At the same time, the France CPI (EU Norm) rose 0.8%, faster than estimates of 0.7% but less than 0.9% growth seen in March. In Italy, inflation remained at 2.1%, while data released on Tuesday showed that price growth in Spain was also stable.
• In general, inflation data from the largest eurozone countries indicate that price pressure has grown moderately. Such a scenario is not desirable for euro because soft inflation data supports market expectations that European Central Bank (ECB) can continue to cute interest rates.
• Entrepreneurs are about to be priced at a 25 basis of score (BPS) reduction in ECB's interest rate at the June policy meeting. A murder of ECB officials expects more slowdown in inflation and economic growth in the face of tariffs imposed by the United States (US) to its trading partners.
• On Tuesday, ECB executive board member Piero Cipollone warned that lower economic growth and inflation due to the global trade war led by the US may have a “unclear contraction” in countries involved, Reuters reported. Cipollone hopes that the recent increase in trade uncertainty may be reduced ”Euro Area Business Investment of 1.1% in the first year and genuine GDP growth around 0.2 percent points to 2025-26“.
• Data released in early Wednesday showed that so far, the eurozone economy is widely held. The initial Eurozone Q1 Gross Domestic Product (GDP) comes to better than expected both a quarterly and annual basis. Eurostat reported that the economy grew 0.4% quarter-on-quarter, higher than the expectations of economists and than the previous reading of 0.2%.

Technical Analysis: EUR/USD has fallen to close to 1.1350

EUR/USD dropped below 1.1400 in European session on Wednesday. The outlook of the main currency pair remains bullish because the 20-week exponential transfer of average (EMA) is higher around 1.0890.

The 14-week relative Index Index (RSI) climbed to close levels of doubt above 70.00 on the weekly chart, indicating a strong momentum, but the chances of some correction could not be decided.

Looking, the psychological level of 1.1500 will be the main resistance for the pair. By contrast, July 2023 high of 1.1276 will be a major support for Euro Bulls.