The EUR/USD forecast is back in focus as traders prepare for the Federal Reserve’s upcoming decision. With mixed US data and weak European numbers, investors are watching the currency pair closely. The outlook is shaped by US Dollar strength, European Central Bank actions, technical chart levels, and upcoming economic reports.
Market Sentiment: Dollar Strength Meets Investor Caution
Market sentiment is split. US economic data remains strong overall. The S&P Global Flash PMI shows expanding business activity. The second-quarter GDP grew at 2.8% annualized, beating forecasts.
These positive surprises have supported US Dollar strength. However, not all signals are upbeat. The core PCE Price Index missed expectations, raising doubts about inflation strength. That weak spot has cooled bullish momentum.
The Federal Reserve is expected to keep rates steady, but traders are watching for language shifts. If the Fed hints at rate cuts later this year, the EUR/USD forecast could tilt in favor of the Euro.
Tepid European Growth Drags on the Euro
Europe’s economy is struggling. Flash PMIs from the Hamburg Commercial Bank show slowing activity. The July composite PMI hit a five-month low. Manufacturing output remains weak.
The European Central Bank already cut rates and may do so again in September. That shows concern over recession risk and sticky inflation. These European Central Bank policies continue to pressure the Euro.
However, if the ECB signals a pause in cuts, the Euro may stabilize. For now, the EUR/USD forecast remains sensitive to any central bank policy shifts.
US Dollar Outlook: Solid but Not Unshakable
Despite some mixed data, the US Dollar strength has held up. Markets see the Fed as likely to maintain its stance. But upcoming reports like Nonfarm Payrolls and the ISM Manufacturing PMI could shift that view.
Weak US numbers may lead to a softer Dollar. That could push EUR/USD higher. Traders are watching closely to adjust their positioning based on these key economic events.
Technical View: EUR/USD Holds Bullish Bias
Technically, the EUR/USD forecast leans bullish. On the weekly chart, the pair holds above dynamic support at 1.0790, with help from the 20 and 100 simple moving averages. Resistance lies near 1.1080 at the 200 SMA.
The daily chart shows strengthening momentum. A bullish 20 SMA has helped the pair rebound from recent dips. As long as EUR/USD stays above 1.0800, further upside remains on the table. Next resistance levels are at 1.0947, 1.1000, and 1.1080. A break above these could open a path toward 1.1140.
ECB and Fed Policy: The Battle of Signals
Central bank messaging plays a major role in the EUR/USD forecast. The Federal Reserve has taken a neutral-to-hawkish tone. The European Central Bank, meanwhile, is easing policy to fight economic stagnation.
If inflation in Europe drops without recession deepening, the ECB may halt further cuts. If US data weakens, the Fed may lean dovish later in the year. These shifts could realign currency flows significantly.
Economic Reports to Watch This Week
Here are the key upcoming releases that will influence the EUR/USD forecast:
- Federal Reserve policy statement and press conference
- US Nonfarm Payrolls report
- US ISM Manufacturing PMI
- German and Eurozone preliminary Q2 GDP
- Eurozone flash CPI inflation data
These data points will drive near-term volatility. Strong US prints favor Dollar strength. Weak results could give the Euro a lift.
Conclusion: Bulls in Control, But Uncertainty Lingers
The EUR/USD forecast remains cautiously optimistic. Technically, the pair holds support and shows signs of bullish continuation. Fundamentally, the picture is more complex. Mixed US data, weak European growth, and diverging central bank policies all play a role.
For now, bulls hold the edge. But that advantage depends on how this week’s economic events unfold. Traders should stay nimble, track central bank language carefully, and prepare for potential breakouts above 1.1000.
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I’m Kashish Murarka, and I write to make sense of the markets, from forex and precious metals to the macro shifts that drive them. Here, I break down complex movements into clear, focused insights that help readers stay ahead, not just informed.