EUR/USD Forecast: Bulls looking for a reason to keep buying

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1226

European Central Bank officials repeat their well-known hawkish message.
US Dollar broad weakness persists despite a more cautious market stance.
EUR/USD consolidates gains above 1.1200, has room to extend its advance.

The EUR/USD pair consolidates gains near a multi-month high of 1.1248, with the US Dollar paring losses but unable to correct last week’s sell-off. The week started in slow motion as the financial markets continues to asses United States easing inflation and its implications for the upcoming Federal Reserve (Fed) monetary policy´s decision next week. Optimism partially receded but not enough to help the Greenback. The broad weakness of the American currency is evident through the Dollar Index (DXY), currently stuck around 100.

The macroeconomic calendar will be scarce this week as the focus shifts to the Fed and the European Central Bank (ECB) meetings next week. Additionally, the US will release the PCE inflation index, Fed’s favorite inflation measure. Ahead of the announcements, Fed officials entered a blackout period, although comments from European ones keep hitting the wires.

ECB policymaker Boštjan Vasle repeated they would need “ to keep tightening policy at our next meeting” amid resilient core inflation. President Christine Lagarde, on the other hand, delivered pre-recorded opening remarks at the ECB conference on central, eastern and south-eastern European countries in Frankfurt, particularly referring to how the Ukraine-Russia war affects growth. “GDP has plateaued. And we are also seeing rising levels of protectionism as countries reconfigure their supply chains to align with new strategic goals. Over the last decade, the number of trade restrictions in place has increased tenfold,” Lagarde noted.

Ahead of Wall Street’s opening, the US published the NY Empire State Manufacturing Index, printed at 1.1 in July, below the previous 6.6 but beating expectations.

EUR/USD short-term technical outlook

The daily chart for the EUR/USD pair shows it trades in a tight range, losing upward strength but far from turning bearish. The pair trades above a bullish 20 Simple Moving Average (SMA), which accelerates north above also bullish longer ones, in line with the dominant trend. Finally, the Momentum indicator turned marginally lower but remains well above its midline, while the Relative Strength Index (RSI) indicator consolidates around 74.

In the near term, and according to the 4-hour chart, technical indicators correct extreme readings, although the RSI is still developing within overbought levels. At the same time, the 20 SMA heads firmly higher, far above the longer ones, which also offer bullish slopes. Overall, the pair is set to continue advancing, although a corrective slide is not out of the picture for now.

Support levels: 1.1180 1.1150 1.1110

Resistance levels: 1.1250 1.1295 1.1230

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

AUD/USD keeps the red near 0.6950 after weak Aussie jobs data

AUD/USD holds losses near 0.6950 on disappointing Australian jobs data, extending the previous day's retracement slide from the monthly high and hitting a fresh weekly low during Thursday’s Asian session. Meanwhile, declining US bond yields drag the US Dollar away from the April 2025 high, touched after Wednesday's hot US CPI, helping limit losses for the currency pair.

USD/JPY slides back below 158.00 as USD reverses post-CPI gains

USD/JPY extends the previous day's pullback from a three-week high, attracting follow-through selling and sliding below 158.00 during Thursday's Asian session. Traders remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. The US Dollar, meanwhile, reverses Wednesday's hot CPI-led gains to April 2025 highs as US bond yields retreat on China bond-buying talk, further pressuring the pair.

Gold shrugs off hot US PPI as risk aversion drives bond yields lower

Gold attracts fresh buying on Thursday as weakness across global equities, driven by mounting concerns over AI-related investments, triggers a sharp pullback in US Treasury yields and drags the US Dollar lower from fresh year-to-date highs.

Ripple clings to $1.30 support as downside risks intensify

Ripple is stuck in a bearish trend, trading near $1.30 on Thursday. The remittance token’s bearish shift reflects the broader cryptocurrency market, which remains under heavy selling amid concerns about accelerating inflation in the US.

Budget preview: Is Healey impressing the bond market?

There is less than 2 weeks to go before the Chancellor delivers his first budget. Unusually for the UK, the economic and financial backdrop to this budget is upbeat. UK bonds have been rallying, the FTSE 100 is the top performing major stock index this week, and the Pound is also stabilising versus the Dollar.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?