German CPI flatlines, eurozone CPI next

[Ben Graham]

The euro is up for an eighth consecutive day and has gained 2.4% during that time. In the North American session, EUR/USD is trading at 1.1738, up 0.36% on the day.

German inflation flatlines in June

German data on Monday pointed to a weakening German economy. The CPI report indicated that the deflationary process slowly continues.

The inflation rate for June came in at 0% m/m, down from 0.1% in May and below the consensus of 0.2%. Annually, inflation dropped to 2.0% from 2.1% and below the consensus of 2.1%. The eurozone releases its CPI report on Tuesday.

Inflation has been dropping in small increments and has now fallen to the European Central Bank's inflation target of 2%. The ECB cut the deposit rate to 2.0% earlier in June and meets next in July. Although eurozone inflation is largely contained, there are concerns about the impact that US tariffs and counter-tariffs by US trading partners could have on the inflation picture. The ECB is likely to maintain rates in July but could lower rates in September if disinflation continues.

US consumer spending (PCE) declines by 0.1%

The US continues to show signs that the economy is slowing down. Last week, GDP was revised downwards to -0.5% in the first quarter. This was followed by US consumer spending for May (PCE) which posted a 0.1% decline, following a 0.2% gain in April and shy of the consensus of 0.1%. This was the first contraction since January. If economic data continues to head lower, pressure will increase on the Federal Reserve to lower interest rates, which isn't expected before the September meeting.

EUR/USD Technical

• EUR/USD is testing resistance at 1.1755. Above, there is resistance at 1.1791
• 1.1718 and 1.1682 are the next support levels

EUR/USD 1-Day Chart, June 30, 2025

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