- The EUR/USD outlook shows caution ahead of a likely European Central Bank rate cut.
- The US private sector added 37,000 jobs in May, well below the forecast.
- Business activity in the US services sector contracted.
The EUR/USD outlook shows caution ahead of a likely European Central Bank rate cut. Despite a decline in the dollar, the euro pulled back on Thursday as traders awaited the ECB meeting. However, downbeat US data in the previous session weakened the dollar, boosting the euro.
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The European Central Bank is set to hold its policy meeting on Thursday. Market participants expect the central bank to cut interest rates by 25-bps. Policymakers have maintained a dovish tone due to the recent decline in inflation. At the same time, US tariffs have led to a downgrade in the outlook for global growth.
Moreover, traders will wait to see whether policymakers signal more rate cuts to come. Such a message would drag the euro lower.
On the other hand, the dollar remained frail after a set of downbeat US economic figures in the previous session. The US private sector added 37,000 jobs in May, well below the forecast of 111,000. Meanwhile, business activity in the services sector contracted. The PMI came in at 49.9, missing the forecast of 52.0. These reports pointed to economic weakness due to Trump’s tariffs.
EUR/USD key events today
- ECB Main Refinancing Rate
- ECB Monetary Policy Statement
- US Unemployment Claims
- ECB Press Conference
EUR/USD technical outlook: Rally pauses near the 1.1401 key level
On the technical side, the EUR/USD price has pulled back to retest the 1.1401 key level. At the same time, the price has pulled back to the 30-SMA. Still, it trades above the SMA with the RSI over 50, suggesting a bullish bias.
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However, EUR/USD has remained attached to the 1.1401 level for some time, chopping through it. This is a sign that bulls are not ready to make big swings above the level. However, with the SMA near, bullish momentum might surge enough to allow the price to make a new high. With the right catalyst, the price could retest the 1.1500 key psychological level.
However, this pause might also be a sign that bulls have reached the limit. Therefore, bears might strengthen enough to push the price below the SMA, indicating a shift in sentiment.
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Saqib Iqbal
