EUR/USD Forecast: Euro could have a hard time staging a rebound
- EUR/USD struggles to build on Thursday's rebound, stays near 1.0700.
- US data and quarter-end flows could camp up the pair's volatility on Friday.
- The first round of French presidential election will take place on Sunday.
EUR/USD stays in a consolidation phase at around 1.0700 on Friday after posting small gains on Thursday.
Euro PRICE This week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.02% | 0.06% | 0.72% | 0.11% | -0.03% | 0.76% | 0.68% | |
| EUR | 0.02% | 0.10% | 0.79% | 0.18% | 0.02% | 0.85% | 0.77% | |
| GBP | -0.06% | -0.10% | 0.63% | 0.08% | -0.09% | 0.73% | 0.67% | |
| JPY | -0.72% | -0.79% | -0.63% | -0.60% | -0.71% | 0.08% | -0.05% | |
| CAD | -0.11% | -0.18% | -0.08% | 0.60% | -0.13% | 0.65% | 0.59% | |
| AUD | 0.03% | -0.02% | 0.09% | 0.71% | 0.13% | 0.82% | 0.75% | |
| NZD | -0.76% | -0.85% | -0.73% | -0.08% | -0.65% | -0.82% | -0.07% | |
| CHF | -0.68% | -0.77% | -0.67% | 0.05% | -0.59% | -0.75% | 0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
The US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index data for May, the Federal Reserve's preferred gauge of inflation, later in the day. Investors are likely to react to the monthly core PCE Price Index print, which is not distorted by base effects and excludes volatile food and energy prices.
Investors expect the monthly core PCE Price Index to rise 0.1% in May following the 0.2% increase recorded in April. A reading at or below the market expectation could make it difficult for the US Dollar (USD) to find demand in the American session. On the other hand, a print of 0.2% or higher could provide a boost to the USD and weigh on EUR/USD.
Even if the PCE inflation report hurts the USD, EUR/USD could struggle to stage a decisive rebound, with investors refraining from positioning themselves for an extended Euro strength ahead of the first round of election in France this weekend.
It's also worth noting that this Friday is the last trading day of the second quarter. Quarter-end flows and position adjustments later in the day could ramp up market volatility and trigger irregular movements in major currency pairs.
EUR/USD Technical Analysis
1.0670, the Fibonacci 78.6% retracement of the latest uptrend, stays intact as strong support. In case EUR/USD drops below this level and confirms it as resistance, 1.0600 (psychological level, static level) could be set as the next bearish target.
On the upside, 1.0700 (psychological level, static level) aligns as interim resistance before 1.0730-1.0745 (Fibonacci 61.8% retracement, 100-period Simple Moving Average) and 1.0760 (Fibonacci 50% retracement).
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Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
