EUR/USD Forecast: Euro caught between the ECB and more US data
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UPGRADE- The ECB is set to announce its decision on Thursday: a 25 bps rate hike or a pause.
- The US Dollar remains unaffected by US consumer inflation data; Producer Price Index (PPI), Retail Sales, and Jobless Claims scheduled for release on Thursday.
- The EUR/USD pair continues to trade within a familiar range, holding above 1.0700.
The EUR/USD was not affected by the release of US consumer inflation data and continues to trade within a familiar range. Upside momentum remains capped, with the 1.0700 zone providing support. The focus now turns to the European Central Bank (ECB) meeting, which has become an event with the potential to trigger sharp moves due to the lack of clear consensus on what actions will be taken.
Late on Tuesday, reports suggested that the ECB will raise its inflation forecast for the current year at Thursday's monetary policy meeting, setting the stage for a potential rate hike. Following this rumor, the market is eagerly awaiting clarity from the ECB. The dilemma facing the ECB is whether to hike rates by 25 basis points or implement a pause in the tightening cycle. While the economic outlook calls for a pause, the persistence of high and sticky inflation could prompt policymakers to take further action.
The ECB's decision will be crucial, as it could result in a dovish hike or a hawkish hold. The press conference with Christine Lagarde will complement the decisions made. In the event of a hawkish hike, the Euro could experience a rally, although it may not be sustainable.
In the US, inflation data came close to market consensus and triggered sharp moves, but ultimately the US Dollar returned to its level before the data release. The numbers did not significantly change the overall context.
Between the ECB announcement and Lagarde's press conference, crucial US data will be released, including the Producer Price Index, Retail Sales, and Jobless Claims. These numbers will add fuel to volatility and could trigger sharp moves in the EUR/USD pair, potentially challenging the range-bound trading that has dominated in recent days.
EUR/USD short-term technical outlook
The EUR/USD remains within a familiar range between 1.0700 and 1.0760, showing no clear direction. The overall trend remains bearish, but 1.0700 continues to provide solid support. For an improved outlook, the Euro needs to rise above 1.0830.
On the 4-hour chart, the EUR/USD exhibits a slight upward bias inside a downward channel. The pair is facing immediate resistance at 1.0760. If consolidation occurs above that level, it could open the door to 1.0800. However, technical indicators show signs of downside momentum, with the Relative Strength Index (RSI) about to fall below 50 and Momentum approaching the downside from the middle. A rebound seems likely in the short term while above 1.0710. A break below that level could expose 1.0700. A further downward break could lead to a test of monthly lows and potentially trigger a bearish acceleration.
View Live Chart for the EUR/USD
- The ECB is set to announce its decision on Thursday: a 25 bps rate hike or a pause.
- The US Dollar remains unaffected by US consumer inflation data; Producer Price Index (PPI), Retail Sales, and Jobless Claims scheduled for release on Thursday.
- The EUR/USD pair continues to trade within a familiar range, holding above 1.0700.
The EUR/USD was not affected by the release of US consumer inflation data and continues to trade within a familiar range. Upside momentum remains capped, with the 1.0700 zone providing support. The focus now turns to the European Central Bank (ECB) meeting, which has become an event with the potential to trigger sharp moves due to the lack of clear consensus on what actions will be taken.
Late on Tuesday, reports suggested that the ECB will raise its inflation forecast for the current year at Thursday's monetary policy meeting, setting the stage for a potential rate hike. Following this rumor, the market is eagerly awaiting clarity from the ECB. The dilemma facing the ECB is whether to hike rates by 25 basis points or implement a pause in the tightening cycle. While the economic outlook calls for a pause, the persistence of high and sticky inflation could prompt policymakers to take further action.
The ECB's decision will be crucial, as it could result in a dovish hike or a hawkish hold. The press conference with Christine Lagarde will complement the decisions made. In the event of a hawkish hike, the Euro could experience a rally, although it may not be sustainable.
In the US, inflation data came close to market consensus and triggered sharp moves, but ultimately the US Dollar returned to its level before the data release. The numbers did not significantly change the overall context.
Between the ECB announcement and Lagarde's press conference, crucial US data will be released, including the Producer Price Index, Retail Sales, and Jobless Claims. These numbers will add fuel to volatility and could trigger sharp moves in the EUR/USD pair, potentially challenging the range-bound trading that has dominated in recent days.
EUR/USD short-term technical outlook
The EUR/USD remains within a familiar range between 1.0700 and 1.0760, showing no clear direction. The overall trend remains bearish, but 1.0700 continues to provide solid support. For an improved outlook, the Euro needs to rise above 1.0830.
On the 4-hour chart, the EUR/USD exhibits a slight upward bias inside a downward channel. The pair is facing immediate resistance at 1.0760. If consolidation occurs above that level, it could open the door to 1.0800. However, technical indicators show signs of downside momentum, with the Relative Strength Index (RSI) about to fall below 50 and Momentum approaching the downside from the middle. A rebound seems likely in the short term while above 1.0710. A break below that level could expose 1.0700. A further downward break could lead to a test of monthly lows and potentially trigger a bearish acceleration.
View Live Chart for the EUR/USD
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