EUR/USD Forecast: Impact of US Inflation Data on Fed Policy
The latest US PPI and CPI reports have confirmed that inflation is steadily heading towards the 2% target. As a result, investors are now anticipating a potential rate cut by the Federal Reserve in September. This anticipation has led to a mixed week for the dollar, with the euro gaining strength in the Forex market.
US retail sales surged, and jobless claims declined, indicating a robust economy despite previous recession fears. These positive economic indicators are contributing to the overall bullish momentum for the EUR/USD pair.
Key Events to Watch Next Week for EUR/USD
Investors will closely analyze the policy meeting minutes from both the European Central Bank (ECB) and the Federal Reserve in the upcoming week. Additionally, Fed Chair Powell is scheduled to speak at the Jackson Hole Symposium, providing further insights into future monetary policy decisions.
While markets predict a Fed rate cut in September, the ECB has already initiated measures to lower borrowing costs. However, differences in inflation trends between the Eurozone and the US could influence the dovishness of respective monetary policies.
Chairman Powell’s speech is expected to introduce volatility into the US dollar, potentially impacting the EUR/USD exchange rate.
EUR/USD Weekly Technical Analysis
From a technical standpoint, the EUR/USD price is currently trading within a bullish channel, having retested the channel’s resistance level. The price remains above the 22-SMA, with the RSI signaling a bullish bias.
While a pullback to the 22-SMA or the channel support line is possible, the overall trend points towards a target level of 1.1051 as long as higher highs and lows continue to be established.
Interested in forex trading? Consider investing with eToro, a provider where 67% of retail investor accounts lose money when trading CFDs. Make sure to assess your risk tolerance before participating in forex trading.
Source : www.forexcrunch.com