EUR/USD Weekly Forecast: Focus Turns to Fed, NFP Next Week

• The euro strengthened on upbeat Eurozone business activity data.

• The dollar was weak as business activity in the US fell more than expected.

• The core PCE price index aligned with expectations, holding at 0.3%.

The EUR/USD weekly forecast leans slightly bullish as the dollar faces pressure from weakening economic indicators.

Ups and downs of EUR/USD

The week was bullish for the EUR/USD pair as the euro strengthened on upbeat Eurozone business activity data. Still, policymakers remain convinced that the ECB will implement its first cut in June. 

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Meanwhile, the dollar was weak as business activity in the US fell more than expected. Moreover, the gross domestic product figures missed forecasts, indicating a slowdown in the economy. Despite this, inflation figures remained high, leading to a decline in rate-cut expectations. The week ended with the core PCE price index, which aligned with expectations, holding at 0.3%.

Next week’s key events for EUR/USD

Next week, the US will have three key events: the FOMC policy meeting, the ISM manufacturing PMI, and the NFP report. All these will go a long way in shaping the outlook for Fed rate cuts. 

At the Fed meeting, markets expect the central bank to hold rates at 5.50%. However, more emphasis will be given to what policymakers say regarding the future, especially inflation. Hawkish guidance could lead to a decline in rate cut expectations that would see the EUR/USD pair decline. 

Similarly, investors will look for policy guidance in the nonfarm payrolls report. The last few months have shown solid demand in the labor market, which has delayed Fed rate cuts. Another upbeat report could push back the timing for the first rate cut to November. 

EUR/USD weekly technical forecast: Bears eye 1.0500 as pullback meets resistance

On the technical side, the EUR/USD price is trading near the 1.0725 key resistance level and the 22-SMA line. The price retests this level after breaking below to make a new low. 

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Notably, the bias is bearish as the price has made a series of lower lows and highs. At the same time, it has respected a bearish trendline and the 22-SMA as resistance. Therefore, there is a high chance this trend will continue next week. 

The price might bounce lower to retest the 1.0500 key support level. Moreover, if it breaks above the SMA, then it will meet the trendline resistance, which will likely reverse it lower.

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