• EUR/USD has fallen to the 1.0800s, close to a critical level for the short-term trend.
• Further weakness could tip the near-term outlook in favor of bears. 
• Empire State Manufacturing, Michigan Sentiment, US Industrial Production and commentary from ECB’s Nagel round off the week.

EUR/USD is trading in the 1.0800s on the last day of the week after taking a step down from its previous range in the 1.0900s. The catalyst seems to have been Thursday’s US macro data, which dented optimism in the Federal Reserve (Fed) implementing early interest-rate cuts. 

Thursday’s data showed the US Producer Price Index (PPI) unexpectedly rose 1.6% YoY in February after an upwardly-revised 1.0% increase in January, easily beating consensus estimates of 1.1%.

Along with lower-than-expected Initial Jobless Claims and a rise – albeit not as much as predicted – in Retail Sales to 0.6% from a negative, revised-down 1.1% previously, the data suggested the US economy remains hotter than expected. 

It probably means the Fed will have to keep interest rates higher for longer. This  is negative for EUR/USD but positive for the US Dollar (USD) since higher interest rates attract greater inflows of foreign capital.