- The dollar is falling on hopes of a Fed rate hike pause.
- Russia has cut gas supply through Nord Stream 1 to a fifth of its capacity.
- Investors are awaiting eurozone inflation data.
Today’s EUR/USD forecast is bullish as the dollar weakens in hopes of a less aggressive Fed monetary policy. However, this move is being capped by a fuel crisis as Europe continues to struggle after Russia further cut gas flows. Russia is providing less gas to Europe in a fresh escalation of the energy standoff between Moscow and the European Union.
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This will make it more difficult and expensive for the EU to fill its reserves before the winter heating. The critical Russian gas delivery route to Europe, Nord Stream 1, has had its capacity halved to just a fifth of what it was before.
Moscow has attributed the supply restrictions to sanctions and the delayed return of a serviced turbine. Brussels has blamed Russia for using energy as a weapon to blackmail the EU and seek revenge for Western sanctions for its invasion of Ukraine.
European politicians have repeatedly warned that Russia might entirely halt gas deliveries this winter, pushing Germany into a recession and causing costs for consumers and industry to rise even higher.
EUR/USD key events today
Investors expect an increase in the US core PCE price index for June.
News releases from Europe will include German unemployment change, GDP, and Eurozone inflation. Investors will particularly pay attention to the Eurozone inflation data as it will inform the ECB on its future monetary policy.
EUR/USD technical forecast: Bulls attempting a break above the bearish channel resistance
Looking at the 4-hour chart, the price has been trading within a bearish channel with clear support and resistance levels. Before the price came into this channel, there was an uptrend. It is therefore highly likely that the price breaks above resistance to continue the uptrend.
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The price is currently trading above the 30-SMA, showing a shift in sentiment from bearish to bullish. The RSI also favors bullish momentum as it has started trading above 50. If the current candle closes above the channel resistance, the price might retest the May 12 support at 1.03512. At the same time, it might be a false breakout, leading to a break below 1.01009.
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Saqib Iqbal
