EUR/USD Analysis: US Dollar Strengthens Following Inflation Report

Yesterday, the US Consumer Price Index (CPI) report was released, showing an increase in consumer prices. According to Forex Factory, annual CPI rose from 2.4% to 2.7%, exceeding analysts' expectations of a 2.6% rise.

As reported by Reuters, the data supports the stance of Federal Reserve Chair Jerome Powell, who has repeatedly stated that the anticipated inflationary pressure—driven in part by tariffs—is a reason to refrain from further interest rate cuts.

However, President Donald Trump interpreted the data differently. On his Truth Social platform, he posted that consumer prices remain low and called for an immediate rate cut.

The market responded with a stronger US dollar—indicating that participants believe interest rates are likely to remain at current levels in the near term. Notably, the EUR/USD exchange rate fell to the 1.1600 level for the first time since late June (as indicated by the arrow).

Technical Analysis of the EUR/USD Chart

Analysing the EUR/USD chart as of 7 July, we identified:

→ A long-term ascending channel
→ A potential downward trajectory (marked by red lines)

Since then, the pair has followed the outlined path and declined by more than 1%.

It is worth noting that today, the EUR/USD price is near the lower boundary of a key trend channel, which may offer significant support — traders may look for a technical rebound from this level.

Additionally, attention should be paid to the upcoming release of the US Producer Price Index (PPI) at 15:30 GMT+3. These figures carry particular weight in light of potential renewed inflationary pressures. This and other upcoming data may prove decisive for the near-term direction of EUR/USD.

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