Ecb's Kazaks Argues for Further Interest Rate Cuts Amid Usd Weakness

The EUR/USD pair is rising towards 1.1200 during Friday's European trading hours. The pair is trading upwards as the US Dollar (USD) faces selling pressure. This follows a sharp fall in US bond yields after weak US Producer Price Index (PPI) and Retail Sales data were released on Thursday. The US Dollar Index (DXY), which tracks the dollar's value against six major currencies, is down to around 100.50. Meanwhile, the 10-year US Treasury bond yields have fallen more than 3% to around 4.40% from their monthly high of 4.55% recorded on Thursday. Economic data on Thursday showed that producer inflation, measured by the PPI, unexpectedly declined in April, and retail sales barely grew. The notable 0.7% drop in service prices led to deflation in the PPI, while growth in goods prices remained flat. Retail sales increased at a moderate pace of 0.1%, compared to a robust growth of 1.5% in March. This week, the US Consumer Price Index (CPI) data for April also grew at a slower pace than expected. Weak US consumer and producer inflation increases expectations of interest rate cuts by the Federal Reserve (Fed). However, traders have not increased moderate bets as consumer inflation expectations remain high due to the repercussions of US President Donald Trump's new economic policies. According to the CME's FedWatch tool, the probability of the Fed keeping rates stable in the 4.25%-4.50% range at the June and July meetings is 91.8% and 61.4%, respectively. The short-term outlook for the EUR/USD pair remains uncertain as the 20-day Exponential Moving Average (EMA) acts as a key barrier around 1.1210. The 14-period Relative Strength Index (RSI) is recovering strongly to 50.00 after sliding near 40.00, suggesting indecision among traders. Looking ahead, the April 28 high of 1.1425 will be the main resistance for the pair. Conversely, the March 18 high of 1.0955 will be a key support for Euro bulls.