EUR/USD saw a slight decline on Thursday, dropping below 1.0880 as the US Dollar made a broad recovery. Despite this, the pair is still up for the week, but investors are wary of a potential late surge for the USD as they speculate on the Fed’s stance on rate cuts.
Traders are already pricing in a rate cut from the European Central Bank (ECB) in June, with ECB officials hinting at this possibility in recent statements. Next week, all eyes will be on the Purchasing Manager’s Index (PMI) figures from both the EU and the US.
Meanwhile, Fed officials are closely watched by investors, as they continue to maintain a cautious approach regarding rate cuts. Market expectations currently suggest a 70% chance of a quarter-point cut in September and a 90% chance of two cuts by the end of the year.
On the technical side, EUR/USD remains bullish in the short term, trading above the 200-hour Exponential Moving Average (EMA) and testing its highest levels since mid-March. The pair has also surpassed the 200-day EMA and is up 2.5% from its recent low near 1.0600. However, a key resistance level lies at 1.0980, and further gains towards 1.1000 will require strong bullish momentum.
Overall, the focus remains on central bank policymakers and upcoming economic data releases as traders navigate the volatile currency markets.