The euro strengthened on positive Eurozone business activity data, while the dollar weakened due to a larger-than-expected drop in US business activity. The core PCE price index met expectations, holding steady at 0.3%. The EUR/USD weekly forecast leans slightly bullish as the dollar faces pressure from weakening economic indicators.
The week saw a bullish trend for the EUR/USD pair as the euro gained strength on upbeat Eurozone business activity data. However, policymakers anticipate the ECB’s first rate cut in June. On the other hand, the US dollar struggled as business activity fell more than expected, and GDP figures missed forecasts, indicating an economic slowdown. Despite this, high inflation figures led to a decrease in rate-cut expectations. The week ended with the core PCE price index holding at 0.3%.
Next week, key events for the EUR/USD pair include the FOMC policy meeting, ISM manufacturing PMI, and the NFP report in the US. These events will play a significant role in determining the outlook for Fed rate cuts. Market expectations for the Fed meeting predict a hold on rates at 5.50%, with a focus on inflation guidance. A hawkish stance could reduce rate cut expectations and lead to a decline in the EUR/USD pair.
Investors will also closely monitor the nonfarm payrolls report for policy guidance. Solid labor market demand in recent months has delayed Fed rate cuts, and a positive report could further postpone the first rate cut to November.
Technically, the EUR/USD price is near the 1.0725 resistance level and the 22-SMA line, showing a bearish bias with lower lows and highs. The price may test the 1.0500 support level and potentially reverse lower if it breaks above the SMA. Trading forex carries risks, and it’s important to consider your financial situation before investing.