Euro rises helped by strong eurozone inflation data

The euro rose above $1.13 on Friday after stronger-than-expected Eurozone inflation data and ahead of the U.S. non-farm payrolls report, as investors looked for clues on the Federal Reserve’s policy outlook.

Euro rises helped by strong eurozone inflation data

The latest CPI figures showed Euro Area inflation held steady at 2.2% in April, slightly above the expected 2.1%. Notably, services inflation accelerated to 3.9%, its highest level in over a year, while core inflation—which excludes the more volatile food and energy categories—rose to 2.7%, also surpassing forecasts and reinforcing expectations that the European Central Bank may keep interest rates higher for longer. The euro’s strength was also underpinned by a broad weakening in the U.S. dollar, as market participants grew increasingly cautious ahead of the April jobs report. In the U.S., the upcoming employment data is expected to show a slowdown in hiring, with non-farm payrolls likely increasing by just 130,000, down sharply from 228,000 in March. This deceleration comes amid rising uncertainty linked to President Donald Trump’s aggressive tariff stance, which has clouded the outlook for business investment and export demand.

Eyes on tariff war

Meanwhile, broader market sentiment was buoyed by signs of a potential thaw in U.S.–China trade tensions. Risk appetite improved after Beijing announced it is “evaluating” recent U.S. proposals for renewed negotiations, sparking hopes of a possible resolution to the prolonged dispute that has weighed on global growth. Investors will be closely watching both the U.S. labor data and any further developments in trade talks for signals on future monetary policy moves and overall economic momentum.