U.S. Dollar Retreats As Producer Prices Lag Expectations
June 12, 2025
The U.S. dollar has faced downward pressure as recent Producer Prices Index (PPI) data disappointed market expectations. The latest report revealed a month-over-month increase of 0.1% in May, falling short of the anticipated 0.2%. Core PPI also showed a rise of 0.1%, whereas analysts had predicted a growth of 0.3%. This news significantly impacts currency trading, particularly against the euro, pound, Canadian dollar, and Japanese yen.
U.S. Dollar Index Under Pressure
The U.S. Dollar Index (DXY), which measures the dollar’s strength against a basket of currencies, is attempting to settle below critical support levels around 98.00 to 98.20. If sellers succeed in pushing through this support, the index could decline further to the 96.70 to 96.90 range.
EUR/USD Surges on Economic Data
In reaction to the soft PPI data, the euro has gained momentum against the dollar. The EUR/USD currency pair tested new highs, driven by the release of economic reports. Initial Jobless Claims indicated that 248,000 Americans filed for unemployment benefits during the past week, exceeding economists’ forecasts of 240,000. Should the EUR/USD pair close above resistance at 1.1550 to 1.1570, it may aim for the next resistance area between 1.1685 and 1.1700. However, the Relative Strength Index (RSI) suggests potential overbought conditions, which may signal a future pullback.
GBP/USD Moves Higher Despite GDP Decline
The British pound has shown resilience, tracking upwards as the GBP/USD currency pair approached the 1.3600 mark. This rise occurs despite disappointing news out of the UK, where GDP declined 0.3% month-over-month in April, contrary to an expected fall of 0.1%. A successful breach above resistance at 1.3620 to 1.3640 could lead GBP/USD towards further resistance at 1.3735 to 1.3750. ### Canadian Dollar Draws Demand
In North America, the Canadian dollar has strengthened, with the USD/CAD pair testing new lows amid growing interest in commodity-related currencies. On the technical side, USD/CAD settled below support at 1.3650 to 1.3665, now heading toward potential support levels between 1.3575 and 1.3590. ### USD/JPY Faces Treasury Yield Pressures
The USD/JPY currency pair is undergoing pressure as it tests support between 143.50 and 144.00. This movement aligns with a pullback in U.S. Treasury yields, with the 2-year notes dipping to approximately 3.90% and the 10-year notes settling around 4.35%. If USD/JPY falls below 143.50, it could target support ranges from 140.00 to 140.50. ### Economic Outlook
Traders are closely monitoring the currency markets as they respond to various economic indicators and reports. The fluctuations in the U.S. dollar may influence future monetary policy decisions and trading strategies.
For ongoing updates on economic events, refer to the economic calendar.
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