EUR/USD follows market-wide rally after US CPI

The Euro strengthened against the US Dollar (USD) along with other currencies after US inflation data showed a slowdown. This pushed the EUR/USD pair to its highest level in five weeks. However, the gains weren’t sustained. The EUR/USD pulled back from its daily highs, suggesting a possible reversal and a return to lower levels.

This Friday brings another data point to consider: US Producer Price Index (PPI). This data measures inflation at the wholesale level and could impact the currency market. The EUR/USD reached a new five-week high on Thursday. This surge was fueled by a broad sell-off of the US dollar, after US Consumer Price Index (CPI) data showed the slowest inflation rate since late 2021.

Market participants are now more optimistic about the possibility of faster interest rate cuts by the Federal Reserve. This positive sentiment is carrying over into Friday’s trading session.
However, a potential rise in US PPI data could dampen the spirits of bullish investors. European data, specifically German inflation figures, did not have a significant impact on the Euro on Thursday.