EUR/USD Forecast: Bulls Pause at 1.1750 Ahead of US Core PCE

• The EUR/USD forecast is bullish, with eyes on the 1.1800 level as the dollar weakens further.
• The EU’s optimistic fiscal conditions support the growth outlook, lending further support to the euro.
• Markets now focus on the US Core PCE Price Index for further impetus.

The euro extended its winning streak on Friday, with the EUR/USD pair posting its seventh consecutive daily gain and eyeing the 1.1750 handle, its highest level in around four years. The pair is on course to hit above 2% weekly gain as the bets for the Fed’s rate cut are mounting. A combination of factors, including dovish commentary from within the Fed, Trump’s criticism of the Fed, and dismal US data, has weighed on the greenback, fueling the euro’s bullish trajectory.

–Are you interested in learning more about the next cryptocurrency to explode? Check our detailed guide- 

The US dollar’s recent sell-off stems from the US President’s criticism of the Fed Chair and reportedly his potential replacement by September or October. The move has raised questions about the Fed’s independence, especially when policy decisions are finely balanced due to mixed economic signals. Traders now apprehend a quicker easing, further weakening the US dollar.

The ECB and Fed’s divergence continues to play a pivotal role. The Fed is torn between softening growth and inflation risks, while the ECB has a clear path, pausing the easing cycle.

The US economic data painted a gloomy growth picture. The US final Q1 GDP data showed a weaker-than-expected 0.5% contraction, compared to an estimated 0.2% decline. Meanwhile, consumer confidence dipped, and the jobless claims fell in the last two of three readings. US durable goods orders surged 16.4%, more than doubling the forecast. However, the increase was driven primarily by one volatile component: aircraft orders.

Europe’s fiscal outlook is also optimistic as new defense and infrastructure spending could boost the Eurozone’s growth. On the trade front, EU-UK trade negotiations are progressing slowly. Meanwhile, US trade tariffs continue to threaten the growth outlook.

The markets have now turned their focus to the US Core PCE Price Index, which is the Fed’s preferred gauge for inflation. A modest 0.1% monthly and 2.6% annual prints are expected. A hotter inflation reading may pause the dollar’s decline and limit gains for EUR/USD. However, the broader trend projects a level of 1.1800 to 1.2000.

EUR/USD Technical Forecast: Consolidating Gains at 1.1700

The 4-hour chart for the EUR/USD shows a consolidation around the 1.1700 handle, with a clear upside bias. However, the markets are looking for a catalyst to resume their upward momentum. The combination of a 20-period SMA and a support zone around 1.1650 presents strong support. The RSI is near the overbought zone, which may result in mild profit-taking.

–Are you interested in learning more about forex indicators? Check our detailed guide-

Alternatively, a move below the 1.1650 level may encounter resistance at 1.1600. However, a deeper retracement may look to test the 1.1450 level, which is the worst-case support for the pair.

Looking to trade forex now? Invest at eToro!

68% 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 your money.