The Euro rose above 1.1700 against the US Dollar, but stayed nearly 0.6% below Tuesday’s 1.1787 high. The US Dollar remained supported after strong US inflation data on Wednesday.
Attention shifted to the US Producer Price Index (PPI) and a meeting between US President Donald Trump and Chinese President Xi Jinping. US producer prices were expected to align with Tuesday’s CPI pattern and reflect inflation linked to the Middle East war.
Market moves were expected to stay muted while traders waited for news from the Trump–Xi talks. Topics included Iran, US agricultural trade, rare earth exports, and Taiwan.
Eurozone data did not lift the Euro, with GDP growth confirmed at 0.1% in Q1 and 0.8% year on year. These compared with 0.2% and 1.3% in Q4.
Industrial Production rose 0.2% in March, below the 0.3% forecast, and February was revised to 0.2% from 0.4%. Year on year, output fell -2.1% in March after -0.8% previously.
The Dollar was supported after April’s CPI showed a near three-year high annual rate, which reduced expectations of Fed rate cuts. EUR/USD technical signals leaned bearish, with RSI below 50 and a weakening MACD.
Price action broke below 1.1720 and pointed to support at 1.1645–1.1675, with 1.1510 next if that fails. Resistance levels included 1.1740, highs above 1.1790, and 1.1851.
Looking back at the market situation around this time in 2025, we saw a clear pattern of US dollar strength fueled by surprisingly high inflation. That dynamic crushed expectations for Federal Reserve rate cuts and pushed EUR/USD down from the 1.1700s. The sluggish European growth back then provided a stark contrast that favored dollar bulls.
Today, on May 13, 2026, we see an echo of that divergence, although the EUR/USD is trading at a much lower level near 1.0750. The latest US CPI report for April 2026 showed core inflation remains sticky at 3.1%, making a near-term Fed rate cut unlikely. Meanwhile, Eurostat’s flash estimate confirmed the Eurozone economy expanded by a meager 0.3% in the first quarter of this year.
The underlying weakness in Europe that we observed in 2025 persists, with recent German factory orders falling unexpectedly. This economic gap is widening expectations that the European Central Bank will cut its own interest rates by July, well before the Fed. Historically, when the ECB moves before the Fed, it has often led to sustained euro weakness.
For derivative traders, this environment suggests that buying put options on the EUR/USD could be a prudent way to position for a break lower in the coming weeks. Puts provide a clear, defined-risk method to capitalize on a potential slide towards the 1.0700 support level. This strategy is especially relevant given the contrasting signals from the two economies.
Implied volatility is currently moderate, meaning option prices are not excessively high, presenting a reasonable entry point. Structuring a put spread, by buying a put and selling another at a lower strike price, could further reduce costs. This would be an effective way to target a move toward the year-to-date lows around 1.0600, should the economic data continue on its current path.
