Euro rallies amid higher risk appetite and hot Eurozone inflation data

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The Euro (EUR) rallies more than 0.5% against the US Dollar (USD) on Wednesday, trading at 1.1760 at the time of writing, after hitting session highs at 1.1770.

EUR/USD jumps more than 0.5% on Wednesday, hitting session highs above 1.1770.
Eurozone producer price inflation soared in March amid the impact of the US-Iran war.
Trump hinted at a swift end to the war and sent the safe-haven USD tumbling across the board.

The Euro (EUR) rallies more than 0.5% against the US Dollar (USD) on Wednesday, trading at 1.1760 at the time of writing, after hitting session highs at 1.1770. Growing hopes that the US-Iran war is nearing its end have sent the US Dollar tumbling, and the hot Eurozone Producer Prices Index (PPI) data provided additional support to the Euro.

Data released by Eurostat on Wednesday showed that producer prices accelerated to a one-year high of 2.1% year-over-year (YoY) in March from -3% in February, well above the 1.8% expected. These figures confirm the inflationary pressures of Iran’s war and add to the case of an upcoming rate hike by the European Central Bank (ECB). Month-on-month, producer prices jumped to a nearly 4-year high to 3.4%, from -0.6% in the previous month, also beating expectations of a 3.3% increment.

A few hours earlier, the Eurozone's final HCOB Services Purchasing Managers Index (PMI) figures corroborated that the sector's activity contracted in April, albeit at a somewhat softer pace than previously thought; 47.6 vs the 47.4 preliminary estimations. German Services PMI has been left unchanged, at 46.9. The French and Italian services activity also showed figures consistent with shrinking business activity.

Investors, however, are celebrating comments by US President Donald Trump, who has paused the efforts to escort vessels through the Strait of Hormuz, claiming progress on peace negotiations with Iran. Previously, US Secretary of State Marco Rubio announced the end of the offensive stage, practically discarding a resumption of hostilities.

Technical Analysis: Bulls will meet resistance around 1.1790

EUR/USD shows a constructive near-term bias following an impulsive bullish reaction from Tuesday's lows at the 1.1675 area, although it remains contained within the last two weeks' trading range, below the 1.1790 area so far.

Momentum indicators have moved within positive territory. The 4-hour Relative Strength Index (RSI) is holding around 65, and the Moving Average Convergence Divergence (MACD) histogram, in the same timeframe, shows growing green bars, hinting at an increasing upside momentum.

Bulls, however, will be tested at the mentioned resistance around 1.1790 (April 20, May 1 highs), which closes the path to the April 17 high near 1.1850. Further up, the next target is the February 10 high, near 1.1930. On the downside, daily lows are at 1.1690, but the key support is in the area between 1.1645 and 1.1675, which has held downside attempts several times in April.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

HCOB Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among services providers is generally declining, which is seen as bearish for EUR.

Economic Indicator

Producer Price Index (MoM)

The Producer Price Index (PPI) released by the Eurostat is an index that measures the change in prices received by domestic producers of commodities in all stages of processing (crude materials, intermediate materials, and finished goods). Generally, a high reading is seen positive (or bullish) for the EUR, while a low reading is seen as negative (or bearish).