EUR/USD Supported as German State CPI Data Shows Inflation Easing in May

EUR/USD is drawing attention as German state-level CPI readings for May show a broad-based easing in inflation pressures, with Bavaria at +2.6% y/y (prior +2.9%), Saxony at +2.7% (prior +3.0%), North Rhine Westphalia at +2.4% (prior +2.7%), and Baden Wuerttemberg at +2.4% (prior +2.6%). Monthly figures also pointed to marginal declines across all reporting states. Notably, this cooling trend contrasts with preliminary inflation readings from France and Spain released earlier in the session, which showed a different trajectory. The data feeds into expectations for the national German CPI figure and the broader Eurozone HICP release, both critical for ECB policy direction. A confirmed deceleration in German inflation could reinforce market expectations for further ECB rate adjustments, potentially weighing on the euro. Traders should monitor the national German CPI print closely, as a softer-than-expected reading could push EUR/USD toward nearby support levels, while any upside surprises may limit downward pressure on the pair.