EUR/USD trims gains, returning below 1.1350 with US PCE inflation in focus 

• EUR/USD trims gains as the US Dollar finds support ahead of the PCE inflation data release.
• A US federal court reversed the previous day's sentence blocking tariffs and sent the US Dollar tumbling on Thursday. 
• In Europe, the focus will be on the German CPI due later today.

EUR/USD is trading with minor losses around 1.1340 at the time of writing on Friday, but it holds most of the ground taken during Thursday after a US federal court reversed the block on US President Donald Trump's tariffs, triggering a sharp US Dollar (USD) sell-off.

The US Court of Appeals paused the previous day's ruling of the Court for International Trade, which blocked most of the levies introduced on April 2. The decision has added to the global trade scenario and increased pressure on all US assets.

Investors' concerns about the erratic trade policy, coupled with growing fears about US fiscal stability, heightened by a tax-slashing bill that is expected to add trillions of Dollars to an already high US debt, are fuelling the "Sell America" trade and undermining the USD over the last two months.

In the macroeconomic front, US data did little to improve markets 'mood, with weekly Initial Jobless Claims rising beyond expectations and the Gross Domestic Product (GDP) confirming that the economy contracted in the first quarter.

In Europe, German Retail Sales data have failed to support the Euro (EUR), increasing concerns about the health of the Eurozone's major economy, although the impact has been minimal. Investors' focus is on the German Consumer Prices Index figures, due later in the day.

Daily digest market movers: US Dollar finds support ahead of the PCE report

• The US Dollar dropped sharply after the Court of Appeals' decision to temporarily reinstate US President Trump's trade tariffs. However, the Greenback found some footing on Friday, with investors bracing for the release of the US Personal Consumer Expenditures (PCE) Price Index, due later in the day.
  
• US PCE inflation is expected to have ticked up by 0.1% in April, after a flat reading in March, with the yearly rate easing to 2.2% from the previous 2.3% reading. The core figure, of higher relevance to the Federal Reserve (Fed), is expected to show the same monthly performance, with the yearly inflation down to 2.5% from 2.6% in March.
  
• Data released on Thursday revealed that the US Weekly Jobless Claims increased by 240K last week, well above the 230K expected. The previous week's reading was revised down to 226K from the previously estimated 227K.
  
• Apart from that, the first quarter's US GDP confirmed that the economy contracted, although at a slower-than-expected rate, -0.2% instead of the -0.3% previously reported.
  
• Furthermore, US consumer spending slowed down against expectations. The core Personal Consumption Expenditures eased to 3.4% in the first quarter, against the 3.5% expected, all in all increasing fears about the economic momentum.
  
• In the Euro Area, German Retail Sales have shown an unexpected decline in April. Retail consumption fell by 1.1% against expectations of a 0.2% increase, which reveals the soft momentum of the country's economy.
  
• The highlight of the day, however, is the German CPI release, which is expected to show some moderation in April, with the yearly CPI steady at 2.1% and the core index easing to 2% from the previous 2.2%. These figures add to the case for further European Central Bank (ECB) easing in June and might hurt the Euro.

Technical analysis: EUR/USD remains capped by the reverse trendline at the 1.1390 area

EUR/USD bounced sharply on Thursday, printing a bullish engulfing candle on the daily chart. This is a positive sign, but it needs to be confirmed by further appreciation above a previous trendline support, now turned resistance, at 1.1390, and also above the weekly high, at 1.1420.

A confirmation above those two levels would shift the focus towards the April 22 high, near 1.1545.

On the contrary, failure to extend beyond 1.1420 might put bears back in control, and increase pressure towards the 1.1220 support zone ahead of the 1.1135 (May 16 low) and 1.1070 (May 12 low) levels.

EUR/USD 4-Hour Chart