- The dollar fell amid an increase in Fed rate cut expectations.
- The euro got some relief after the first round of French elections.
- Next week, the US will release wholesale and consumer inflation data.
The EUR/USD weekly forecast is bullish as Fed rate cut bets rise and political uncertainty in the Eurozone eases. Moreover, mixed US data also weighs on the dollar.
Ups and downs of EUR/USD
The EUR/USD pair had a bullish week as the dollar fell amid an increase in Fed rate cut expectations. Meanwhile, the euro got some relief after the first round of French elections. Market participants focused on US employment data, including private jobs, job vacancies, jobless claims, and nonfarm payrolls.
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However, the major report was the NFP, which showed another robust increase in employment last month. However, the unemployment rate rose to 4.1%, indicating cracks in the labor market. After the report, the dollar fell as the likelihood of a September cut rose to 72%.
Next week’s key events for EUR/USD
Next week, the US will release wholesale and consumer inflation data. The CPI and PPI reports will shape the outlook for Fed rate cuts. Last month’s inflation figures showed easing price pressures, boosting rate-cut expectations. However, Fed policymakers held their cautious outlook, awaiting more data.
Powell noted that inflation was on a downtrend, but policymakers needed more evidence. Therefore, if price pressures ease in June, policymakers might finally be confident enough to assume a dovish stance. However, if the figures beat forecasts, it would support the Fed’s current outlook for only one cut this year.
EUR/USD weekly technical forecast: higher low signals shift in sentiment
On the technical side, the EUR/USD price has bounced off the 1.0675 support level to break above the 22-SMA. At the same time, the RSI trades above 50, supporting bullish momentum. The price has been making lower highs and lows, indicating a downtrend.
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However, this changed with the last low at the 1.0675 key level. Here, the price made a higher low, which could mean a shift in sentiment. It shows bears were no longer strong enough to push the price to a lower level.
If bulls can make a higher high next week, it will confirm a new bullish trend. Moreover, the price will likely break above the 1.0900 resistance level, allowing bulls to revisit the 1.1101 resistance level.
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Saqib Iqbal
