- A set of PMI data revealed a significant drop in business activity in the Eurozone.
- US jobless claims fell, indicating tough conditions in the labor market.
- US inflation rose 0.1% compared to estimates of a 0.2% increase.
The EUR/USD weekly forecast shows a neutral bias as the Eurozone economy weakens and bets on a Fed rate cut increase.
EUR/USD ups and downs
EUR/USD fluctuated this week and ended almost flat amid a mix of US and Eurozone data. As the week began, a series of PMI figures revealed a significant drop in business activity in the Eurozone. This increased pressure on the ECB to continue cutting interest rates, weighing on the euro.
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Meanwhile, US business activity remained steady as the economy remained resilient despite high interest rates. Moreover, claims for the unemployed have decreased, which indicates difficult conditions in the labor market.
However, the dollar weakened on Friday after the core PCE report revealed cooler-than-expected inflation. Price pressures rose 0.1% compared with estimates for a 0.2% increase, raising the likelihood of another big rate cut in November.
Next week’s key events for EUR/USD
Next week, market participants will pay attention to key US reports, including manufacturing business activity and non-farm payrolls reports. Furthermore, Federal Reserve Chairman Jerome Powell will speak on Monday.
This week’s focus will be on the monthly employment report. In particular, the Fed is paying close attention to the labor market for any weakness. At the last meeting, the central bank cut rates by 50 basis points, saying it was to keep the unemployment rate low. That’s why traders will be watching job growth and unemployment in September for clues about the Fed’s next policy move. Economists expect that the economy will create 144,000 jobs in September.
EUR/USD Weekly Technical Forecast: Bulls show weakness at 1.1175 resistance
On the technical side, the EUR/USD price revisited the resistance level at 1.1175, where it paused. At the same time, the RSI made a bearish divergence, indicating a weakening of the bullish momentum. The price remained in a bullish trend, making bigger highs and lows. However, the RSI showed weakness in the last move.
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Therefore, there is a chance for the price to reverse to challenge the 22-SMA and the bullish trend line. A break below these levels would open the way to the 1.1000 support level. Here the bears will struggle to break the previous low and start making lower highs and lows. Such a move would confirm the beginning of a bearish trend.
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