EUR/USD Forecast: Bulls hesitate around 1.0800

EUR/USD Current price: 1.0797

• United States markets will remain closed amid the celebration of the Independence Day.
• Downbeat Germany Factory Orders limit the bullish potential of the Euro.
• EUR/USD battles around 1.0800, needs to overcome the weekly high at 1.0816.

The EUR/USD pair holds on to recent gains, trading around the 1.0800 mark mid-Thursday. Investors kept selling the US Dollar throughout the European session, although at a slower pace as time went by amid renewed hopes of an upcoming interest rate cut in the United States (US). The Federal Reserve (Fed) quick-started the year anticipating three potential 25 basis point (bps) rate cuts this year, but as inflation picked up in the first quarter, policymakers backed up.

Chairman Jerome Powell became increasingly hawkish, and the odds for rate cuts diluted, down to the point that market participants believed the central bank would go for just one rate cut in 2024. However, things seem to be taking a turn. Financial markets took Fed’s Powell latest words with more optimism and are now hoping a rate cut will come in September. As a result, the USD turned lower.

Data-wise, Germany published May Factory Orders, which fell 1.6% MoM, much worse than anticipated and limiting the Euro’s bullish scope. The upcoming American session is meant to be a quiet one, as US markets will remain closed amid the Independence Day holiday.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows it battles around converging 100 and 200 Simple Moving Averages (SMAs), while the 20 SMA maintains its bearish slope far below the current level. Technical indicators, in the meantime, head north within positive levels, although with limited momentum as EUR/USD trades below the weekly high at 1.816. Once the pair clears this area, the chances of a firmer rally should increase.

In the near term, and according to the 4-hour chart, the upward strength has eased, but the overall picture is bullish. EUR/USD trades above a flat 200 SMA, which provides near-term support at around 1.0785. The 20 SMA eased, but keeps heading higher below the current level, after surpassing a directionless 100 SMA. Finally, technical indicators offer uneven slopes near overbought readings, without suggesting an upcoming slide.

Support levels: 1.0740 1.0700 1.0665

Resistance levels: 1.0815 1.0850 1.0880