EUR/USD Forecast: Euro upside to remain capped ahead of key events

EUR/USD edges higher to start the week.
Technical outlook points to a buildup of bullish momentum.
Investors could refrain from committing to a steady advance in the pair.

Eren Sengezer FXStreet

EUR/USD advances beyond 1.0750 during the European trading hours, starting the week on a bullish note. The pair's technical outlook suggests that additional gains could be witnessed in the near term, but investors are likely to move to the sidelines ahead of this week's key risk events.

The risk-positive market atmosphere makes it difficult for the US Dollar (USD) to find demand early Monday, providing a boost to EUR/USD. The Euro Stoxx 50 Index is up nearly 1% and US stock index futures cling to modest daily gains in the early European session.

May inflation data from the US will be released on Tuesday. The Consumer Price Index (CPI) is forecast to rise 4.1% on a yearly basis, significantly lower than the 4.9% increase recorded in April. The Federal Reserve and the European Central Bank's (ECB) policy announcements on Wednesday and Thursday, respectively, will ramp up the volatility in financial markets in the second half of the week.

In case Wall Street's main indexes gather bullish momentum after the opening bell, the USD could stay on the back foot, and vice versa, since there won't be any high-tier macroeconomic data releases that could impact the currency's valuation.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the four-hour chart climbed above 60 and the 20-period Simple Moving Average (SMA) made a bullish cross with the 100-period SMA, highlighting the buildup of bullish momentum.

On the upside, 1.0800/1.0810 (psychological level, Fibonacci 38.2% retracement of the latest downtrend) aligns as first resistance area ahead of 1.0840 (200-period SMA) and 1.0860 (Fibonacci 50% retracement).

In case EUR/USD returns below 1.0750 (100-period SMA, Fibonacci 23.6% retracement), an extended slide toward 1.0720 (50-period SMA) and 1.0700 (psychological level, ascending trend line) could be witnessed.

Premium

You have reached your limit of 3 free articles for this month.

Start your subscription and get access to all our original articles.

Subscribe to Premium Sign In

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.