The release of the Personal Consumption Expenditures (PCE) Price Index data for April is highly anticipated by market participants, as it is considered the Federal Reserve’s (Fed) preferred measure of inflation. The United States (US) Bureau of Economic Analysis (BEA) will publish this important index on Friday at 12:30 GMT. The core PCE Price Index, which excludes volatile food and energy prices, is expected to show a slight increase of 0.1% on a monthly basis in April, after remaining unchanged in March. However, the annual core PCE inflation is projected to decrease to 2.5% from 2.6% in the past twelve months, while the headline PCE inflation is also set to decrease to 2.2% from 2.3%. This data is closely monitored by Fed officials when making decisions about future monetary policy actions. During the press conference following the May meeting, Fed Chairman Jerome Powell acknowledged that inflation remains above their target and indicated that they anticipate upward pressure to continue. In light of the uncertainty surrounding tariffs, Powell stated that it is best for the Fed to wait for more clarity before making any policy adjustments. TD Securities, in anticipation of the PCE inflation report, expects core PCE prices to remain relatively subdued in April, with a projected increase of 0.1% after the revised data from March shows an upward spike. The annual core PCE inflation is also predicted to rise to 2.6%. Along with this, TD Securities also expects a mean-reversion in personal spending after a sharp 0.7% increase in March. In a recent comment, New York Fed President John Williams expressed his wish to avoid persistent inflation, which could lead to long-term consequences. Minneapolis Fed President Neel Kashkari also stated that he supports maintaining current interest rates until the impact of higher tariffs on inflation becomes clearer. The market may react strongly to any unexpected readings in the monthly core PCE Price Index, which is not influenced by base effects. A higher-than-expected figure of 0.3% or above could bolster the US Dollar (USD) against other major currencies, while a reading of 0% or negative could lead to a decline in the USD’s performance. However, according to the CME FedWatch Tool, the probability of a Fed rate cut in June is currently very low, with a 25% probability of a cut in July. This suggests that there is still room for the USD to strengthen if the monthly core PCE reading surpasses expectations. On the other hand, a softer PCE figure could cause investors to reconsider the possibility of a rate cut in July, potentially weakening the USD. Eren Sengezer, European Session Lead Analyst at FXStreet, provides a technical outlook for EUR/USD, stating that the RSI indicator on the daily chart is currently slightly above 50 and the pair is trading above the 20-day Simple Moving Average (SMA), indicating a lack of seller interest. On the downside, the first support level is at 1.1200 (Fibonacci 23.6% retracement of the January-April uptrend) followed by 1.1015-1.1000 (Fibonacci 38.2% retracement and round level). To the upside, resistance levels can be found at 1.1400 (static level), 1.1500 (static level and round level), and 1.1575 (April 21 high).