EUR/USD, GBP/USD Rise as Stagflation Fears Ease & USD Weakens

EUR/USD gained 0.4% to 1.0875 and GBP/USD advanced 0.5% to 1.2680 as receding stagflation concerns and softer US economic data weighed on the dollar. Recent inflation indicators showed a cooling trend, with US PCE falling to 2.7% from 2.9%, alleviating fears of persistent price pressures amid slowing growth. The Dollar Index retreated 0.3% to 104.50, while USD/JPY dropped 0.8% to 155.20 and USD/CHF fell 0.6% to 0.9080 as risk-off sentiment prevailed. Market participants remain cautious despite improving inflation dynamics, with volatility indices elevated above historical averages. Technical analysis shows EUR/USD facing resistance at 1.0900, while GBP/USD targets 1.2700. Safe-haven flows continue supporting the Japanese yen and Swiss franc. Traders await next week's ECB and BOE policy meetings for further direction, with markets pricing in potential hawkish surprises that could extend euro and sterling gains.