Referenced assets
The Bureau of Economic Analysis (BEA) released the Personal Consumption Expenditures (PCE) price index data on June 25, 2026. The headline PCE price index rose 0.4% on a month-over-month basis and 4.1% year-over-year, matching the Bloomberg economic calendar consensus forecasts. Meanwhile, the core PCE price index—which excludes volatile food and energy components and serves as the Federal Reserve’s preferred inflation gauge—increased by 0.3% from the previous month and 3.4% from a year ago, also aligning perfectly with market expectations. The data highlights persistent inflationary pressures, keeping the Federal Reserve under pressure to maintain a restrictive monetary policy stance.
Headline vs. core PCE inflation
The Federal Reserve closely monitors core PCE inflation because it strips out the transitory volatility of food and energy prices, providing a clearer view of long-term underlying inflation trends. Additionally, the PCE index accounts for substitution bias—where consumers switch to cheaper alternatives as prices rise—making it a more dynamic measure than the Consumer Price Index (CPI).
Personal consumption expenditure - PCE - Source: Bureau of Economic Analysis - Past performance is not indicative of future results.
| Metric | MoM change | YoY change | Trend |
|---|---|---|---|
| PCE price index | 0.4% | 4.1% | Upward from 3.8% prior |
| Core PCE price index | 0.3% | 3.4% | Upward from 3.3% prior |
Consumer spending and prices
- Robust consumer demand: Personal spending rose by 0.7% in May, outpacing the 0.6% forecast, while real personal spending ticked up 0.3%. This indicates that consumer demand remains resilient despite elevated borrowing costs.
- Income growth: Personal income accelerated sharply by 0.7%, well ahead of the 0.4% consensus estimate, providing households with the financial buffer to sustain spending.
- Services vs. goods: Services inflation continues to be the primary driver of price stickiness, sustained by steady wage growth and a tight labor market, as evidenced by initial jobless claims dropping to 215k.
Cross-comparison with CPI and PPI data
The sticky PCE print aligns with the earlier Consumer Price Index (CPI) report, which also showed a flattening of the disinflationary trend, particularly in shelter and core services.
Compared to the Producer Price Index (PPI) data from earlier in the month, which tracks wholesale costs, input pressures remain uneven. While some manufacturing supply chains have stabilized, the pass-through of resilient service-sector input costs continues to filter into consumer-facing metrics, limiting how quickly final prices can moderate.
Macroeconomic and Federal Reserve implications
With headline inflation edging up to 4.1% and core PCE sticking at 3.4%, progress toward the Federal Reserve’s 2% average inflation target appears to have stalled. Combined with an upward revision to first-quarter GDP to 2.1% and resilient durable goods orders, the economic backdrop suggests that the FOMC may prolong its “higher for longer” interest rate stance. The probability of near-term rate cuts may diminish, as the central bank requires more conclusive evidence of cooling demand before easing policy.
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EUR/USD 1-Hour chart technical analysis
EUR/USD 1-hour chart - Source: tradingview.com - Past performance is not indicative of future results
Price action and trend analysis
- Descending Channel Breakout: For the past several days, price action has been tightly contained within a clear descending channel (demarcated by the two solid pink trendlines).
- Recent Breakout: The most notable recent development is that the price has aggressively broken out above the upper descending trendline.
- Moving Averages: The price is currently trading above both the EMA (9) and the MA Cross (9, 21), which are starting to curl upward, confirming short-term bullish momentum following the breakout.
Pivot points & key levels
The chart displays Daily Traditional Pivot Points, providing immediate horizontal structural levels:
- R2 (Resistance 2): 1.14158
- R1 (Resistance 1): 1.13872 — The price is currently testing this level.
- P (Daily Pivot): 1.13559 — Acting as immediate dynamic support.
- S1 (Support 1): 1.13273
- S2 (Support 2): 1.12960
Indicators (RSI & ATR)
- RSI (14): Currently sitting at 59.72 and climbing above its yellow moving average line. It has firmly exited the oversold territory seen on the 24th and has room to run before hitting the overbought threshold (70.00), signaling strong bullish momentum.
- ATR (14): Sitting at 0.00139 (approx. 14 pips). Volatility is ticking up slightly from its recent floor, which aligns with the breakout move.
