EUR/USD Forecast: Steady near highs as ECB holds fire

EUR/USD Current price: 1.0928

• The European Central Bank left interest rates unchanged, as widely anticipated.
• United States unemployment figures resulted worse than expected.
• EUR/USD holds on to higher ground but lacks directional strength.

The EUR/USD pair spent the first half of the day trading uneventfully at around 1.0930, retaining recent gains but static ahead of the European Central Bank (ECB) monetary policy decision. The central bank left rates unchanged, as widely anticipated, with the pair not reacting to the news.

The ECB’s accompanying statement showed policymakers are not pre-committed to any particular rate path and will remain data-dependant. Furthermore, they note some measures of underlying inflation ticked up in May, a mildly dovish comment that hints at no action in the next meeting, although market participants are still betting for a rate cut coming in September, alongside a Federal Reserve (Fed) one. Nevertheless, President Christine Lagarde is about to give a press conference, and her words can trigger some additional action across the board.

Meanwhile, the United States (US) released Initial Jobless Claims for the week ended July 12, which unexpectedly jumped to 243K, much worse than anticipated. On the other hand, the July Philadelphia Fed Manufacturing Survey improved much more than anticipated, hitting 13.9 after printing at 1.3 in June.

EUR/USD short-term technical outlook

The EUR/USD pair consolidates in a tight range near its recent multi-month high at 1.0947, and technical readings in the daily chart show buyers paused. Technical indicators are neutral to mildly bearish but around overbought readings, without signs of bearish strength. At the same time, the pair keeps developing above all its moving averages. The 20 Simple Moving Average (SMA) heads firmly south and is currently crossing converging 100 and 200 SMAs, usually reflecting bulls’ dominance.

According to the 4-hour chart, EUR/USD is neutral in the near term, albeit with the risk skew to the upside. The pair develops above all its moving averages, with the 20 SMA maintaining its upward slope far above the longer ones while providing dynamic support at around 1.0910. Technical indicators, however, have lost their directional strength but hold well above their midlines, suggesting absent selling interest.

Support levels: 1.0910 1.0865 1.0820

Resistance levels: 1.0945 1.0990 1.1020