- The ECB has not given clear guidance on the prospects for interest rate cuts.
- Economists believe there will be two more rate cuts in the Eurozone this year.
- US jobless claims jumped to 243,000 last week.
The EUR/USD outlook points south as the euro falls after an ambiguous European Central Bank meeting. Meanwhile, the dollar recovered slightly after mixed economic data from the US in the previous session.
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The ECB kept rates on hold on Thursday but gave no clear guidance on the outlook for rate cuts in the second half of the year, saying inflation remained high. However, forecasts showed that the central bank expects inflation to continue to fall.
Moreover, policymakers have lost the confidence they had before the June meeting. Initially, inflation in the Eurozone was in a clear downward trend. As a result, the ECB has committed to cutting rates in June. However, as the meeting approached, it became clear that inflation had stalled. Therefore, although the central bank cut rates, some experts felt that it was rushed. Others said the ECB cut only because it had committed to do so.
Economists believe there will be two more rate cuts in the eurozone in September and December. However, the message at Thursday’s meeting was that September is open. This means that the outlook will depend on the incoming data.
On the other hand, the dollar recovered from Thursday’s lows after a series of mixed economic reports. Jobless claims jumped to 243,000 last week, beating forecasts for 230,000. Meanwhile, manufacturing activity in the US Atlantic region rose more than expected in July.
EUR/USD key events today
There will be no key reports from the Eurozone or the US today. As a result, investors will continue to weigh in on yesterday’s ECB meeting.
EUR/USD Technical Outlook: Bearish momentum targets support at 1.0840
On the technical side, the EUR/USD price is trading below the 30-SMA with the RSI below 50, indicating a bearish trend. The change in sentiment came after the RSI made a bearish divergence with the price. This was a sign that the previous bull trend had reached a point where the bulls were tired.
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As a result, the bears took control with a break below the 30-SMA. They are currently looking at the support level of 1.0840. Price now needs to make lower and lower lows to confirm the bearish trend. Otherwise, the price could start to consolidate or continue the bullish trend.
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