- The data showed better-than-expected PMI figures for Germany.
- ECB President Lagarde is very confident inflation is under control.
- Fed meeting minutes revealed some hawkish sentiments among policymakers.
The EUR/USD forecast shows a slight bullish tilt as the euro rebounds on positive Eurozone PMI data. However, the overall bearish trend persists due to the dollar’s strength following hawkish FOMC meeting minutes.
–Are you interested in learning more about forex indicators? Check our detailed guide-
Data on Thursday from the Eurozone showed better-than-expected PMI figures for Germany, which strengthened the euro slightly. The manufacturing PMI rose from 42.5 to 45.4. Meanwhile, the services PMI rose from 53.2 to 53.9. These figures show that business activity in the bloc is improving despite high interest rates. Therefore, there is less pressure on the ECB to start cutting rates.
Nonetheless, ECB policymakers are increasingly confident that they have tamed inflation. The last inflation report showed a drop from 2.6% to 2.4%. Moreover, ECB president Christine Lagarde said on Tuesday that she is very confident inflation is under control. Consequently, markets are more confident that the central bank will cut rates in June.
Meanwhile, Fed meeting minutes released on Wednesday revealed some hawkish sentiments among policymakers, which boosted the dollar. Inflation in the US has remained stubborn since the beginning of the year. Consequently, most policymakers called for the Fed to maintain high rates. However, some went as far as suggesting rate hikes to tame inflation.
Still, since the meeting came before the latest downbeat inflation report, the chances of a rate hike remain low. In the meantime, policymakers are maintaining a cautious tone as they await more evidence that inflation will continue to lower.
EUR/USD key events today
- US unemployment claims
- US flash manufacturing PMI
- US flash services PMI
EUR/USD technical forecast: Bullish channel gives way to bears
On the technical side, the EUR/USD price has broken out of its bullish channel to the downside, showing a bearish reversal. The bullish trend got as high as the 1.0900 level, where the price reversed. Bears have now confirmed the reversal by breaking below the 30-SMA and the channel support line.
–Are you interested in learning more about next cryptocurrency to explode? Check our detailed guide-
Currently, the price is pulling back to retest the 30-SMA and the channel line before either trending lower or returning inside the channel. If the price trends lower, it will likely break below the 1.0800 level to retest the 1.0725 support level. Otherwise, it will retest the 1.0900 level.
Looking to trade forex now? Invest at eToro!
68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Share
Saqib Iqbal
