EUR/USD faces pressure as ECB wage data shows sharp decline to 4.6%

EUR/USD is experiencing downward pressure following the release of ECB's wage tracker data, which revealed negotiated wages fell to 4.6% in Q1 2025 from 5.4% in Q4 2024. The annual reading dropped significantly to below 4.7% from the previous year's levels, marking a substantial deceleration in wage growth across the eurozone. This cooling wage inflation directly supports the ECB's dovish monetary policy stance and reinforces their narrative of moderating inflationary pressures. The data strengthens market expectations for continued ECB rate cuts, potentially widening the policy divergence with other major central banks. Technical indicators suggest EUR/USD could test support at 1.0750 if the downward momentum persists, with resistance forming around 1.0850. Traders should monitor upcoming ECB communications for further policy guidance, as sustained wage moderation could accelerate the euro's weakness against the dollar.