EUR/USD Price Analysis: Holding Gains as USD Slips, Eying NFP

• The dollar is approaching its most significant weekly decline since mid-January.

• Investors believe that the Fed will opt not to raise interest rates this month.

• Inflation in the Eurozone decreased more than anticipated last month.

Today’s EUR/USD price analysis is bullish. On Friday, the dollar approached its most significant weekly decline since mid-January. This shift in sentiment among investors is due to the belief that the Fed will opt not to raise interest rates this month. Such a decision would reduce the attractiveness of the greenback for non-US buyers.

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Elsewhere, the euro remained unchanged, having reached a one-week peak of $1.07685 on Thursday. European Central Bank President Christine Lagarde said there would be additional policy tightening.

Last month, inflation in the Eurozone decreased more than anticipated, accompanied by a slowdown in underlying price growth. Inflation among the 20 Eurozone nations dropped to 6.1% from April’s 7.0%. 

Despite being a slight surprise to investors, this decline was largely expected due to national data released earlier in the week. Furthermore, core inflation, which excludes volatile food and fuel prices and holds significant influence over the ECB’s policy considerations, fell from 5.6% to 5.3%.

Over the past year, the ECB implemented a series of interest rate hikes, totaling 375 basis points, to address mounting price levels. Given the persistence of underlying price pressures, another 25bps increase is already priced in for June 15. 

Notably, influential policymakers, including central bank governors from Germany, the Netherlands, and Ireland, have proposed a potential rate hike in July. 

EUR/USD key events today

Investors are expecting important employment data from the US. The nonfarm payrolls report will reveal whether the labor market is still tight amid high-interest rates. Therefore, it will affect the outlook for Fed rate hikes.

EUR/USD technical price analysis: Bulls aiming for 1.0851

EUR/USD is, at the moment, crossing the 1.0755 resistance level. This is a big plus for bulls as it further confirms the recent shift in sentiment. Bulls took control when they made an engulfing candle at the 1.0650 support level. They then confirmed the takeover by breaking above the 30-SMA. 

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Furthermore, the RSI has crossed above 50, indicating solid bullish momentum. If bulls can find their footing above 1.0755, the next target will be the 1.0851 resistance level.

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