The latest inflation figures from the Eurozone continue to support ongoing concerns regarding persistent price pressures. The Producer Price Index (PPI) logged a monthly increase of 0.6% in April, following a significant 3.4% jump in March, which came in higher than market expectations. On a year-over-year basis, producer price growth accelerated to 4.9%, up from the revised 2.0% reading in the previous month. Similarly, the underlying core Harmonized Index of Consumer Prices (HICP) increased at an annual rate of 2.5% in May, moving up from the 2.2% reported in April and beating the consensus market forecast of 2.4%.

In contrast, business activity indicators showed a slight improvement compared to their preliminary estimates. The HCOB Services PMI was revised higher to 47.7 from 46.4, while the Composite PMI rose to 48.5 from 47.5. Although both figures remain below the neutral threshold and inside contraction territory, they suggest that the slowdown in private sector activity was less severe than first calculated. Even with these revisions, the overall data stream continues to show the quickest decline in economic activity since November 2024. Within this environment, multiple European Central Bank (ECB) policymakers have maintained a hawkish, restrictive stance. Olli Rehn noted that a rate hike in June could act as a preventive step against upside inflation risks. In a similar tone, Gediminas Šimkus highlighted the need for prompt action to stop price pressures from becoming entrenched, while Pierre Wunsch maintained that the baseline arguments for a tighter monetary policy remain completely valid.

On the geopolitical front, Middle Eastern tensions keep rising following a series of retaliatory strikes between Iran and the United States near the strategic Strait of Hormuz. The U.S. Central Command (CENTCOM) confirmed it carried out defensive strikes against Iranian missile positions and naval ships that were believed to be ready to lay sea mines. In response, Tehran directed strikes against American military installations situated across several Gulf nations, including Kuwait, the United Arab Emirates, and Arabia Saudita. This worsening conflict has driven crude oil prices higher, as the chances of restarting diplomatic talks look increasingly unlikely. The Iranian news agency Fars reported that negotiations are completely stalled, though U.S. President Donald Trump has publicly dismissed that description.

Meanwhile, economic releases from the United States continue to point to a highly resilient labor market. The ADP employment report showed the addition of 122,000 jobs in May, coming in above the projected forecast of 117,000. This stable employment reading follows the JOLTS data published on Tuesday, which showed an increase in open job vacancies, further confirming the steady nature of American hiring ahead of the official Non-Farm Payrolls report, where analysts anticipate an addition of 85,000 jobs. Furthermore, the services sector in the United States also printed signals of economic expansion, as the ISM Services PMI climbed from 53.6 to 54.5 in May, pushed higher by businesses accelerating their orders due to expectations of rising future costs. At the same time, the Prices Paid component ticked up from 70.7 to 71.3, showing that the recent push in energy costs is starting to filter into the broader services economy. Despite these underlying factors, New York Fed President John Williams repeated that current monetary policy sits exactly where it needs to be, noting that he sees no clear reason at the moment to either increase or decrease interest rates.

Looking at the technical setup, EUR/USD has turned negative once again after briefly climbing above its 100-period Moving Average to touch a high of 1.1686 on May 29. At present, the 100 and 200-period Moving Averages are running at 1.1642 and 1.1686, respectively. Both indicators are tracking right above the current price action, which highlights a steady downward pressure across the chart. Backed by this renewed selling interest, the price is now actively testing the key horizontal support floor at 1.1590. If the bears manage to clear this barrier, it will likely open the path for a deeper move lower toward the next local support target located at 1.1525.

A close inspection of the momentum oscillators provides clear verification for this developing downward move. The Relative Strength Index (RSI) is currently hovering at the 36 level, moving closer to oversold boundaries. However, a look back at May 17 shows that the RSI dropped to a lower bottom of 20 while trading at very similar price levels. This dynamic shows that the RSI is currently much higher than it was during the previous drop, meaning that the underlying selling power is still quite strong and is not clearing out quickly.

Simultaneously, the MACD indicator confirms this bearish setup, as its histogram is tracking in negative territory and steadily gaining downward depth. Because the signal lines have already executed a clear crossover below the neutral zero threshold, the underlying indicators point to a market where the path of least resistance is directed lower. So long as the price action does not manage to push and close cleanly above the moving average resistance ceiling, the bearish setup remains active, making near-term price bounces vulnerable to new selling interest.

Trading direction: Sell

Entry price: 1.1598

Target price: 1.1525

Stop loss: 1.1640

Validity: Jun 16, 2026 15:00:00