EUR/USD erased losses inflicted after a U.S. court blocked President Trump's tariffs, while the latest U.S. data could leave bulls feeling more confident. U.S. yield and dollar gains after the court ruling faded as investors realized the tariff uncertainty would remain.

EUR/USD then turned positive with help from U.S. data. A jump up in weekly and continuing claims and a drop in Q1 core PCE to 3.4% from 3.5% drove the U.S. rate complex downward.

U.S. Treasury yields turned lower on the session and the dollar's yield advantage over the euro deteriorated.

German-U.S. 2-year spreads tightened as did terminal rate spreads for the Fed and ECB .

EUR/USD rallied back above the 21- and 5-DMAs as well as the daily cloud top with help from the data and rate differentials.

The pair's price action resulted in technical signals highlighting upside risks. A daily bull hammer candle formed, daily RSI diverged on the 7-sesison low struck overnight and a monthly long-legged doji candle has formed.

Investors will now focus on U.S. April core PCE and the final May University of Michigan survey. Should the data indicate inflation and the economy are slowing, the dollar and U.S. rates could fall further, which could underpin EUR/USD.
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(Christopher Romano is a Reuters market analyst. The views expressed are his own)