EURUSD remained under pressure and closed yesterday’s session lower for the fourth consecutive day, showing that the U.S. dollar is gaining clearer short-term strength.
The pair is currently trading around 1.1650, down slightly by 0.1% on the day. This movement reflects the market’s adjustment of Fed policy expectations after a series of hotter-than-expected U.S. inflation data.
The main pressure on EURUSD comes from U.S. CPI and PPI data. April CPI rose 0.6% month-on-month and 3.8% year-on-year, while core CPI increased 0.4%.
At the same time, April PPI rose sharply by 1.4% month-on-month and 6.0% year-on-year, indicating that input cost pressures remain significant.
These figures have raised concerns that U.S. inflation may stay elevated for longer, thereby reducing expectations that the Fed will cut interest rates soon.
The Fed continues to maintain a cautious stance, while the latest comments from Fed officials remain tilted toward prioritising inflation control. After the meeting on 29 April 2026, the Fed kept interest rates unchanged in the 3.50%–3.75% range and emphasised that it would remain data-dependent. Notably, Fed officials recently stated that inflation remains the most urgent risk to the U.S. economy, especially as PCE could continue to rise. This reinforces expectations that the Fed has limited room to ease policy in the near term, thereby continuing to support the U.S. dollar and putting pressure on EURUSD.
On the Eurozone side, the euro still has some support from inflation data. Eurozone inflation rose to 3.0% in April, up from 2.6% in the previous month, mainly driven by higher energy prices. This has led the market to consider the possibility that the ECB may find it difficult to ease policy too soon if price pressures continue to persist.
However, support from the Eurozone has not been strong enough to reverse the short-term downtrend in EURUSD. The reason is that Eurozone inflation has been largely driven by energy prices, while the region is more sensitive to input costs and growth risks. In contrast, U.S. data still shows that the economy remains relatively resilient, giving the Fed more room to keep interest rates higher for longer.
Overall, the short-term outlook for EURUSD remains tilted toward downside pressure, as the USD continues to be supported by hotter U.S. inflation, a sharp increase in PPI, and expectations that the Fed will maintain a cautious monetary policy stance. Although Eurozone inflation rising to 3.0% helps prevent the euro from facing excessive selling pressure, the single currency still lacks a strong catalyst for a clear recovery. In the coming sessions, EURUSD may continue to face pressure if U.S. data remains positive and the market continues to price in the scenario of the Fed keeping interest rates higher for longer.
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