Euro and Pound Retreat as Strong US PCE Data Boosts Dollar

Key Facts

1The US Personal Consumption Expenditures (PCE) price index accelerated to 3.7% year-on-year, exceeding the 3.6% forecast.

2The quarterly core PCE reading came in at 3.6%, above the expected 3.4%.

In a move reflecting persistent price pressures within the US economy, the Euro and British Pound have retreated from recent highs as the US Dollar regained its momentum. Official data showed the annual Personal Consumption Expenditures (PCE) price index accelerated to 3.7%, exceeding the 3.6% forecast. Additionally, the quarterly core PCE reading came in at 3.6%, higher than the expected 3.4%, reinforcing the likelihood that the Federal Reserve will maintain elevated interest rates for a longer period.

These currency market shifts occur amid clear resilience in the US economy, with reports indicating personal income rose by 0.4%, doubling the 0.2% forecast. According to market data, US GDP growth for the second quarter matched expectations at 1.5%. Conversely, previous data from the United Kingdom showed a slowdown in annual retail sales, which recorded 1.6% in August, missing the 2.2% forecast and adding further pressure on the British Pound.

Looking ahead, traders are monitoring technical support levels for EUR/USD following unsuccessful attempts to settle above 1.1700, while markets await signals from Fed officials. According to economic calendar data, US initial jobless claims stood at 206k (as of August 20, 2026), which was lower than anticipated. The continuation of this correction in major pairs will depend on incoming economic data from both the US and the Eurozone.