Euro rebounds from intraday lows as US Dollar loses momentum after PCE data

EUR/USD trims earlier losses on Thursday as traders digest a slew of US economic data that eases demand for the US Dollar (USD) despite heightened geopolitical tensions in the Middle East. At the time of writing, the pair is trading around 1.1655, rebounding from an intraday low of 1.1586.

The Euro (EUR) is benefiting from a softer Greenback, with price action largely driven by US Dollar dynamics and ongoing headlines surrounding the US-Iran war.

The core Personal Consumption Expenditure (PCE) Price Index, the Federal Reserve’s (Fed) preferred inflation gauge, rose 0.2% MoM in April, below market expectations and down from the 0.3% increase recorded in March. On a yearly basis, the Core PCE climbed to 3.3% from 3.2% in March, matching analyst forecasts.

While the data showed inflation remains well above the Fed 2% target, the softer monthly reading offered some relief to markets and weighed on the US Dollar, as traders viewed it as a sign that underlying inflation pressures remain contained for now.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 99, easing after hitting a seven-week high of 99.54 earlier in the day.

Additional data showed the US economy expanded at an annualized rate of 1.6% in the first quarter of 2026, up from 0.5% in the previous quarter but below the 2% growth estimated in the advance reading.

Initial Jobless Claims rose to 215K in the latest week, above market expectations of 211K and higher than the previous week’s 210K reading. Durable Goods Orders rose 7.9% in April, beating forecasts and rebounding sharply from the previous 1.3% decline.

On the geopolitical front, traders remain cautious about the chances of a US-Iran peace deal after both sides reportedly exchanged fresh attacks in the Middle East.

However, Axios reported on Thursday that the US and Iran have reached a preliminary 60-day agreement to extend the current truce, though the deal still awaits final approval from US President Donald Trump.

The lingering geopolitical uncertainty could help limit downside in the US Dollar while keeping Oil prices elevated. Rising crude prices are keeping inflation risks in focus, increasing the likelihood that major central banks, including the Federal Reserve (Fed) and the European Central Bank (ECB), may need to maintain restrictive monetary policy for longer.