Surging euro hits four-month high

The euro keeps pushing higher and is up for a fourth straight day. EUR/USD is trading at 1.0913, up 0.34% on the day. Earlier, the euro touched a high of 1.0920, its highest level since March 21.

The US dollar has hit a rough patch in recent weeks and has lost ground against the major currencies. The euro has sparkled in July, gaining 1.9%.

Eurozone industrial production slides

Eurozone industrial production recorded a sharp decline for a second straight month, a reminder that the manufacturing sector is still in trouble, with weakening demand across most of the eurozone and a global economy that is still trying to find its footing.

Annually, eurozone industrial production declined 2.9% y/y in May, following a revised 3.1% decline in April. Monthly, the indicator declined 0.6% in May, lower than the revised April reading of 0%. Both readings were better than expected, but point to contraction in production.

US PPI higher than expected

The week ended with the US Producer Price index accelerating unexpectedly in June to 2.6% y/y, up from a revised 2.4% and above the market estimate of 2.3%. This was the highest level since March 2023. Monthly, PPI edged up to 0.2%, up from a revised 0% in May and above the 0.1% market estimate.

The higher-than-expected PPI report didn’t make much of a dent in market expectations for a September rate cut, which stand at 88%, according to the CME’s FedWatch. PPI tends to be erratic and the jump in the June data likely doesn’t point to a buildup in inflationary pressures. Last week’s June CPI report was softer than expected and boosted market expectations for an initial rate cut in September.

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EUR/USD Technical

• EUR/USD has pushed above resistance at 1.0893. Next, there is resistance at 1.0925
• There is support at 1.0876 and 1.0844