- The annual US PCE figure points to a gradual decline in inflation.
- Bets on a June Fed rate cut rose above 65%.
- Inflation data in countries such as Germany, France and Spain decreased in January.
The weekly EUR/USD forecast is slightly bearish as inflation in the Eurozone declines, putting pressure on the ECB to consider cutting interest rates.
EUR/USD ups and downs
EUR/USD had a mildly bearish week amid inflation data from the US and the Eurozone. It was a largely quiet week, with few high-impact reports on the calendar. In particular, the US Personal Consumption Expenditure report revealed a mixed picture of US inflation. While the monthly figure increased, the annual figure indicates a gradual decline in inflation. Accordingly, bets on a June rate cut rose above 65%.
–Are you interested in learning more about CFD brokers? Check out our detailed guide-
Meanwhile, inflation in countries such as Germany, France and Spain eased in January, increasing pressure on the ECB to cut interest rates. Moreover, inflation estimates in the Eurozone revealed a decline that sent the pair down.
Next week’s key events for EUR/USD
Next week, traders will analyze US employment data to signal the timing of a Fed rate cut. In January, the country registered 353 thousand jobs, which is an impressive increase compared to the previous month. Moreover, it was well above estimates, which sent the pair lower and expectations of a rate cut fell.
The labor market and economy as a whole continued to show resilience despite higher interest rates. As a result, Fed speakers played down expectations of a Fed rate cut. Markets now believe the first cut will come in June.
Therefore, a higher-than-expected employment reading could lead to further delays in interest rate cuts. On the other hand, a cut would increase bets for a cut in June.
EUR/USD weekly technical forecast: Bulls looking for opportunity above 22-SMA
On the technical side, EUR/USD has moved above the 22-SMA, a sign that the bulls may be ready to take over. The previous decline was stopped at a solid support zone consisting of the key psychological level of 1.0700 and the Fib retracement level of 0.618.
–Are you interested in learning more about MT5 brokers? Check out our detailed guide-
The bullish move paused to retest the recently broken SMA before likely continuing higher. If the SMA remains firm as support, the price will get an opportunity to retest the resistance level at 1.1100. However, if the bears continue to be strong, the price could break below the SMA and support level of 1.0700. This would allow the price to target the support level of 1.0501.
Do you want to trade Forex now? Invest in eToro!
67% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing money.
