EUR/USD clings to gains, around mid-1.1100s post-German CPI

   •  A slump in the US bond yields weighed on the USD and helped gain traction.
   •  Softer than expected German CPI did little to influence or attract any fresh selling.

The EUR/USD pair held on to its modest recovery gains around mid-1.1100s and had a rather muted reaction to the latest German inflation figures.

The preliminary version of the German consumer inflation figures showed that the headline CPI decelerated sharply to 0.2% in May and the yearly rate eased more than expected to 1.4% as compared to 2.0% recorded in the previous month.

The softer readings, however, did little to influence the price action, with a modest pullback in the US Dollar - led by the ongoing slump in the US Treasury bond yields amid the global flight to safety, supporting the mildly positive tone surrounding the major.

The US President Donald Trump's unexpected announcement to impose 5% tariffs on Mexican goods intensified fears of a global trade war and drove investors towards perceived traditional safe-haven assets - like the sovereign bonds.

It would now be interesting to see if the pair is able to capitalize on the positive move as market participants now look forward to the US economic docket - highlighting the release of the core PCE price index, for some fresh impetus on the last day of the week.

Technical levels to watch