Euro struggles as German inflation disappoints
At the start of Monday’s European session, the EUR/USD pair trades in a narrow range, hovering around the 1.1665 level at the time of writing. After bouncing off support at 1.1650, the pair saw a modest uptick amid a slightly improved market mood. However, weaker-than-expected German producer inflation data has capped further upside momentum.
Investors breathed a sigh of relief after the President of the United States stated on Friday that raising tariffs on China to 100% would not be sustainable. Additionally, confirmation of a meeting between the U.S. Treasury Secretary and the Chinese Vice Premier later this week signals efforts by the world’s two largest economies to de-escalate trade tensions.
In the United States, concerns over bad loans at regional banks—which rattled markets late last week—have eased following strong quarterly earnings reports from major banks. This has helped improve overall market sentiment and added pressure on the U.S. Dollar.
In the Eurozone, Germany’s Producer Price Index (PPI) declined for the third consecutive month in September, missing market expectations. According to Destatis, the monthly PPI fell by 0.1%, against forecasts for a 0.1% increase. This follows declines of 0.5% in August and 0.1% in July. On a yearly basis, the PPI dropped by 1.7%, extending the 2.2% contraction seen in August.
Monday’s European economic calendar is relatively light, with speeches from European Central Bank (ECB) board members Isabel Schnabel and Joachim Nagel being the only notable events. No major data releases are scheduled in the United States for the day.
Economic data released from China on Monday showed that Gross Domestic Product grew by 1.1% in Q3, beating expectations of 0.8%. Industrial production accelerated to 6.5% year-over-year, and retail sales rose by 3% in September—both exceeding forecasts. These figures suggest that China’s economy remains resilient despite tariff pressures from the United States.
The upbeat Chinese data has strengthened China-linked currencies such as the Australian Dollar (AUD) and New Zealand Dollar (NZD), while adding further pressure on the U.S. Dollar.
From a technical perspective, EUR/USD has pulled back after reaching the 1.1730 target of a Double Bottom pattern. The pair is now testing broken trendline support near the 1.1650 zone, which has so far held off bearish momentum, though upside attempts remain limited.
The 4-hour Relative Strength Index (RSI) hovers around the 50 level, indicating a lack of clear directional bias. A confirmed break below 1.1650—where bulls were capped on October 9 and 15—could hand control to sellers and push the pair toward the October 15 low near 1.1600 and the October 14 low around 1.1545.
On the upside, intraday highs at 1.1675 remain well below Friday’s peak at 1.1730. A surprise rally beyond these levels could bring the October 1 high at 1.1775 back into play.