- The EUR/USD outlook indicates building enthusiasm over trade talks between the US and the Eurozone.
- Moody’s downgraded the US government’s credit rating.
- US data on Friday revealed weaker-than-expected consumer sentiment.
The EUR/USD outlook indicates building enthusiasm over trade talks between the US and the Eurozone, which is boosting the euro. At the same time, the dollar fell after a downgrade to the US government’s credit score.
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The Financial Times reported that serious trade talks between the US and the Eurozone had started. The news increased the likelihood of a trade deal, boosting the euro. Already, the US has signed deals with the UK and China, improving risk appetite. A deal with the Eurozone would further brighten the outlook for the global economy.
Elsewhere, Moody’s downgraded the US government’s credit rating due to its huge and growing debt. The move soured demand for US assets, including the dollar. A weak dollar allowed the euro to gain at the start of the week.
Data on Friday revealed weaker-than-expected consumer sentiment in the US. US consumers have lost confidence in the US economy since Trump started his aggressive tariff campaign. However, recent data has shown resilience, especially in the labor market. Therefore, the Fed is not in a hurry to lower borrowing costs. However, experts believe incoming data over the next few months might still reflect the negative impact of Trump’s tariffs on the economy. Still, currently, market participants expect the next rate cut in September.
EUR/USD key events today
Market participants are not looking forward to any key releases from the US or the Eurozone.
EUR/USD technical outlook: Bulls eye 1.1301 resistance break
On the technical side, the EUR/USD price has surged above the 30-SMA, showing bulls have a strong lead. At the same time, the RSI trades above 50, suggesting solid bullish momentum. Sentiment recently shifted after the price found support at the 1.1100 key level.
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Bulls emerged at this level with enough strength to push beyond the 30-SMA. After that, the price consolidated near the SMA for some time before rallying towards the 1.1301 resistance level. A break above this level would make a higher high, strengthening the bullish bias.
Moreover, it would clear the path for EUR/USD to retest the 1.1500 key psychological level. To start a bullish trend, the price would have to create a pattern of higher highs and higher lows.
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Saqib Iqbal
