Dollar Retreats as PPI Misses Estimates: EUR/USD and GBP/USD Resistance Levels Under Pressure

At the start of August, widely followed U.S. Producer Price Index (PPI) data lost its influence on the U.S. Dollar Index (DXY). The June decrease of -0.3% fell short of analysts' expectations of +0.0%, while core PPI rose only +0.2%, missing the forecasted +0.4%. This data set has guided risk-on themes and dollar-denominated currency pairs to strengthen.

Key Resistance Levels in Dollar: 100.50–100.65 Critical Zone

The DXY index is attempting to break below the 100.50–100.65 support zone, with a secondary target at 99.75–99.90. This movement has created opportunities for emerging market (EM) investors, though the dollar's retreat may be limited. The Federal Reserve's lack of clarity on interest rates could further destabilize inflation stability expectations.

■June PPI: -0.3% (forecast: +0.0%)

■Core PPI: +0.2% (forecast: +0.4%)

■NY Empire State Manufacturing Index: Jumped from 5.70 to 15.60 (forecast: 8.8)

EUR/USD and GBP/USD Technical Resistance Breakdown

EUR/USD remained stuck near the 1.1420–1.1435 resistance, but the dollar's weakness pushed it toward the 1.1500–1.1515 target. Similarly, GBP/USD broke the 1.3450–1.3465 resistance and reached 1.3500, though RSI entering overbought territory raises short-term pullback risks.

■EUR/USD resistance: 1.1420–1.1435

■GBP/USD target: 1.3535–1.3550

■RSI warning: Overbought (GBP/USD)

USD/CAD and USD/JPY Show Contrarian Movements

USD/CAD declined toward the 1.4010–1.4025 support, despite a pullback in precious metals (gold below $4,050). Meanwhile, USD/JPY held steady despite falling Treasury yields, reflecting liquidity drawdown dynamics in Japan.

■USD/CAD support: 1.4010–1.4025

■Gold price: Below $4,050

■USD/JPY trend: Flat amid yield decline

Bora Yalın Note: These data sets are weakening the dollar's reserve currency status in the short term. However, Fed's interest rate uncertainty may temporarily sustain risk-on fluctuations. EM assets and currency pairs should focus more on technical levels due to inflation expectation volatility. Especially GBP/USD's overbought zone, could create short-term profit-taking pressure.