- Consumer prices in the US experienced a moderate rise in July.
- The European Central Bank will likely halt its rate-hiking efforts in September.
- Producer prices in the US rose slightly more than anticipated in July.
The EUR/USD weekly forecast is bearish as economists expect a pause in ECB rate hikes in September.
Ups and downs of EUR/USD
EUR/USD ended the week lower as the euro fell. A Reuters poll of economists during the week indicated that the European Central Bank would halt its rate-hiking efforts in September.
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Meanwhile, consumer prices in the US experienced a moderate rise in July due to reduced costs for various goods. Consequently, the Federal Reserve will likely maintain current interest rates in the upcoming month.
The Labor Department reported a 0.2% increase in the Consumer Price Index for last month, aligning with the growth seen in June.
At the same time, producer prices in the US rose slightly more than anticipated in July. This increase was driven by a swift recovery in the cost of services, marking the quickest acceleration in almost a year. However, the overall pattern aligned with a decrease in inflationary pressures.
Next week’s key events for EUR/USD
Next week, investors will focus on reports from the US. The retail sales report is a leading indicator of consumer spending. Consumer spending, on the other hand, drives the broader economy. Investors are expecting an increase in the retail sales figure. This would indicate a strong economy.
Investors will also focus on the FOMC meeting minutes, which will give more details on the last Fed meeting. Furthermore, it will show how policymakers came to the decision to hike rates. Finally, it will give clues on the next Fed policy move.
EUR/USD weekly technical forecast: Bearish momentum
The daily chart’s bias for EUR/USD has changed from bullish to bearish. The price has broken below the 30-SMA and the 1.1051 support level. Moreover, this move has pushed the RSI below the pivotal 50-level, indicating solid bearish momentum.
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Although there has been a shift in sentiment, the trend has not yet changed to bearish. Bears must break below the 1.0851 support and start making lower lows and highs to start a bearish trend. However, if they cannot break below 1.0851, we might see the price consolidate before resuming the uptrend.
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