The European currency showed mixed trading in early deals on Tuesday. While the euro edged higher against the pound as the latter slid on slower-than-expected inflation rate in the U.K. in April, it drifted weaker against the rest of majors on weak European equities.
European stocks are trading lower as investors await the release of the FOMC minutes and a speech from Fed Chairman Ben Bernanke before the Joint Economic Committee of Congress on Wednesday for cues on the Fed's stance on continuing its easy monetary policy.
The dollar retreated from a six-week high against the euro amid speculation that Bernanke would not hint at tapering bond purchases this week. Investors also look forward to a speech by ECB President Mario Draghi in London on Thursday.
The Japanese yen slipped against its major rivals as investors turned their eyes to the Bank of Japan's two-day monetary policy meeting starting today. The Bank of Japan is expected to keep its monetary policy unchanged and stick to its aggressive approach in achieving the 2 percent target for inflation. Investors will pay close attention to BOJ Governor Haruhiko Kuroda's currency-related comments following the policy meeting.
While speaking at a press conference after the government's regular Cabinet meeting, Japan's economy minister Akira Amari said that he expects the currency levels to stabilize at a point matching the basic strength of Japanese economy.
The pound plunged today as U.K. April consumer price inflation slowed more than expected and hit its lowest since September. With the inflation rate remaining above the Bank of England's target of 2 percent, the central bank may opt out expansion of quantitative easing programme in coming months.
Annual inflation fell to 2.4 percent from 2.8 percent in March, slower than the 2.6 percent increase expected. Month-on-month, consumer prices gained 0.2 percent, slightly weaker than the prior month's 0.3 percent increase and also below the 0.4 percent rise forecast by economists.
Core inflation that excludes energy, food, alcoholic beverages and tobacco slowed to 2 percent from 2.4 percent a month ago. The rate was marginally below the consensus forecast of 2.3 percent.
Output prices inflation in British factory sector eased to 1.1 percent year-on-year in April, slower than a 1.9 percent gain in March. Economists expected a 1.4 percent rise. On a monthly basis, output prices fell 0.1 percent against expectations for a 0.2 percent increase.
Germany's producer price inflation slowed for the third consecutive month in April, data released by the Federal Statistical Office revealed today. Producer prices rose only 0.1 percent in April from a year ago, following a 0.4 percent increase in March. Economists had forecast an increase of 0.2 percent for April.
On a monthly basis, producer prices slipped by a more-than-expected 0.2 percent, the same rate of decrease as seen in March. It was forecast to fall 0.1 percent.
The common currency climbed to a 6-day high of 0.8490 against the pound immediately following the UK data, up 0.6 percent from Asian session's 4-day low of 0.8438. Further bullish extension is in the offing for the EUR/GBP currency cross, with 0.85 seen as the next likely target level.
The euro failed to sustain gains above 1.29 against the dollar and retraced from 1.2903 to as low as 1.2853 hit at the beginning of today's European deals. If the single currency extends downtrend, 1.2820 is seen as the next likely support level in the near-term.
The 17-nation bloc currency also erased its Asian session advance against the Swiss franc, pulling back to a low of 1.2450 around 5:15 am ET from a session's peak of 1.2491. If the pair extends downtrend, it may find support at 1.2430 and the likelihood of a trend shift could help the pair challenging the 1.25 area.
The European shared currency eased to 132.09 against the yen around 6:05 am ET from a 4-day high of 132.32 hit earlier in the session. The next support for the euro-yen pair is seen at 131.0 and a bullish reversal could help the pair testing the 132.50 resistance line in the near-term.
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Forex News
June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.