EUR/USD Forecast: Calm consolidation above 1.0900
- The US dollar fell modestly on Monday amid lower Treasury yields.
- The EUR/USD shows stabilization after bottoming out on Friday.
- A break above 1.0930 would strengthen the Euro, while a drop below 1.0880 could intensify negative pressure.
The EUR/USD rose marginally on a quiet Monday across financial markets. The last week of the month will witness key inflation data releases, and market participants will hear from many central bankers. The US dollar weakened moderately on Monday amid a slide in US yields and a rebound in commodity prices.
After PMI data on Friday triggered some pessimism about the economy's health, data released on Monday showed a decline in the German Ifo. The headline in June dropped from 91.5 to 88.5, below the market expectation of 90.7, while the Expectation Index tumbled from 88.3 to 83.6, and the Current Assessment fell from 94.8 to 93.7.
The European Central Bank's forum on central banking in Sintra has started, with many central bank officials worldwide in attendance. ECB President Lagarde will speak several times, as will other ECB policymakers, beginning on Tuesday. If the ECB wants to send a message to the market this week, it has an opportunity. Sticking to the current "data-dependent" mantra is the most likely scenario, signaling another rate hike in July.
Fed Chair Powell will speak on Wednesday at the Sintra forum, but surprises are unlikely. Following central bankers' talks, the focus will turn to inflation data, starting with Eurozone figures and then on Friday in the US with the Core Personal Consumption Expenditures. Those numbers will influence monetary policy expectations.
EUR/USD short-term technical outlook
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The EUR/USD held above the 55-day Simple Moving Average (SMA) that stood at 1.0880 and retook 1.0900 on Monday, but it was moving with little conviction amid low volume and limited price actions. The pair is offering mixed signals. The daily chart still shows the price above key bullish SMAs, with mixed technical indicators. A daily close above 1.1000 would open the door to more gains and fresh monthly highs.
On the 4-hour chart, the pair remains below the 20-SMA at 1.0930. Above it, short-term momentum will turn to the upside. On the contrary, a drop below 1.0880 could increase the bearish pressure, exposing the 1.0845/1.0850 support area (last week's low). Technical indicators are mixed, with the RSI and Momentum moving with no clear direction, around midlines.
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
