Dollar picking up ahead of PCE inflation data

The euro-dollar currency pair extended its reversal from Thursday’s highs, with EURUSD trading on Friday below 1.1330, as investors trim their dollar shorts, ahead of the release of April’s US Personal Consumer Expenditures (PCE) Price Index numbers.

On Thursday, a US federal court reversed the block on US President Donald Trump’s tariffs, triggering a sharp US dollar sell-off.

Investors’ concerns about the erratic trade policy, coupled with growing fears about US fiscal stability, heightened by a tax-slashing bill that is expected to add trillions of dollars to an already high US debt, are fuelling the “Sell America” trade and undermining the USD over the last two months.

On the macroeconomic front, Thursday’s US data did little to improve markets’ mood, with weekly Initial Jobless Claims rising beyond expectations and the Gross Domestic Product (GDP) confirming that the economy contracted in the first quarter.

In Europe, German Retail Sales data have failed to support the euro, increasing concerns about the health of the Eurozone’s major economy, although the impact has been minimal. Investors’ focus is on the German Consumer Prices Index figures, due later in the day.