Federal Reserve Chair Jerome Powell recently stated that policymakers needed to have more confidence in the declining trend of inflation before making any decisions. This comes after US inflation decreased for the first time in four years in June. As a result, investors have increased the likelihood of a rate cut in September to 93%.
The EUR/USD weekly forecast remains bullish as the dollar weakened following a softer-than-expected US inflation report. The euro had a strong week as the dollar fell due to increased expectations of a Fed rate cut. Additionally, political uncertainty in France cleared up after recent elections.
During the week, Powell’s cautious remarks on inflation led to a brief strengthening of the dollar. However, this was reversed when the US consumer inflation report showed a decline. Economists were surprised by the drop in inflation, with investors now anticipating a higher chance of a rate cut in September.
Looking ahead, the upcoming week’s key events for EUR/USD include the ECB bank lending survey and the US retail sales report. With recent economic data showing weakness in the economy, a decline in retail sales could further pressure the Fed to lower interest rates.
On the technical side, the EUR/USD price has reached a key resistance level of 1.0900 after a strong bullish move. The price is well above the 22-SMA, indicating a bullish bias, and the RSI is approaching the overbought region, signaling increased bullish momentum. It is likely that the price will break above 1.0900 in the coming week, confirming a new bullish trend and potentially leading to a rally towards the 1.618 Fib extension level.