The U.S. Bureau of Economic Analysis reported on Friday that the annual inflation rate in the United States, as measured by the Personal Consumption Expenditures (PCE) Price Index, decreased from 2.3% in March to 2.1% in April. This data, scheduled to be released by the BEA at 12:30 GMT on Friday, is considered the Federal Reserve’s preferred measure of inflation. The core PCE Price Index, which excludes volatile food and energy prices, is expected to rise 0.1% in April after no change in March. However, over the past twelve months, core PCE inflation is predicted to decrease slightly from 2.6% to 2.5%. Similarly, headline annual PCE inflation is projected to decline from 2.3% to 2.2%. Market watchers closely monitor PCE inflation data as it is taken into consideration by the Fed when making decisions on monetary policy. During the press conference after their May meeting, Fed Chairman Jerome Powell acknowledged that inflation remains higher than their target and expects this upward pressure to continue. Powell also stated that due to uncertainty surrounding tariffs, they will wait for more clarity before deciding on the next policy move. TD Securities, in preparation for the PCE inflation report, predicts that core PCE prices will increase 0.1% in April after remaining flat in March, with the previous month’s data likely to be revised upwards. They also anticipate personal spending to revert to more normal levels after a surge of 0.7% in March due to front-loading. In a speech earlier in the week, New York Fed President John Williams expressed his desire to avoid highly persistent inflation as it could become permanent. Meanwhile, Minneapolis Fed President Neel Kashkari believes interest rates should be kept steady until the effects of higher tariffs on inflation become clear. Any unexpected changes in the monthly core PCE Price Index, which is not affected by base effects, are likely to have an immediate impact on the strength of the U.S. Dollar (USD). A reading of 0.3% or above could lead to a rally for the USD, while a reading of 0% or a decrease could weaken it. According to the CME FedWatch Tool, the market currently does not predict any chance of a Fed rate cut in June, and only a 25% chance in July. This suggests that there may still be some room for the USD to rise if the monthly core PCE reading is higher than expected. Alternatively, if the PCE data is weaker than expected, investors may reassess the likelihood of a rate cut in July, making the USD less attractive. Eren Sengezer, European Session Lead Analyst at FXStreet, commented on the technical outlook for EUR/USD, stating that the RSI on the daily chart is slightly above 50 and the currency pair is trading above the 20-day SMA, suggesting a lack of selling pressure. The first support level is at 1.1200, followed by 1.1015-1.1000. On the other hand, resistance levels can be found at 1.1400, 1.1500, and 1.1575.