- US dollar gained momentum during the American session on higher Treasury yields.
- Eurozone and US preliminary June PMIs will be watched closely.
- The EUR/USD retreated from monthly highs, still bullish but losing conviction.
The EUR/USD hit the highest level in months at 1.1011 but failed to hold above 1.1000 and corrected to the 1.0950 area. The recovery of the US Dollar pushed the pair to the downside. Expectations from the European Central Bank (ECB) were offset by Federal Reserve (Fed) Chair Powell's testimony, suggesting that more rate hikes are likely.
Analysts are currently discussing the final rate from the European Central Bank. Some forecast one more hike in July to 3.75%, and others include another hike in September, bringing the rate to 4%. Those actions will be "data-dependent", mostly Consumer Price IndexI-dependent. The flash PMI for June, to be released on Friday, will be important. The German Manufacturing PMI is expected to rise to 43.5, and the Service PMI to decline from 57.2 to 56.2. The Eurozone Manufacturing PMI is expected to remain at 44.8, and the Service PMI to drop from 55.1 to 54.5.
US yields rose on Thursday, offering support to the greenback. The US Dollar Index rose after three days of declines, retaking the 102.00 area. Fed Chair Powell repeated that interest rates will likely increase in the coming months. The Fed's decision will emerge from a balance between economic performance and inflation figures. Data released on Thursday showed Initial Jobless Claims at the highest level since October 2021, but on the positive side, an increase in Existing Home Sales. On Friday, the June PMI will be watched closely.
EUR/USD short-term technical outlook
-638230628343996477.png)
The EUR/USD failed to retain the 1.1000 area and pulled back. The trend is up, but the Momentum is fading. The Euro needs a confirmation above the mentioned area to clear the way for a test of the key barrier located slightly below 1.1100. The current market context shows the US dollar recovering momentum, which could make it difficult for the Euro to resume the upside.
On the 4-hour chart, the Euro remains above key levels and is supported by a short-term uptrend line. Technical indicators offer mixed signals. Ahead of the Asian session, the pair must hold above 1.0940 (20-Simple Moving Average) and regain 1.0960 for the Euro to recover momentum. A slide under 1.0940 would point to an extension to the downside, targeting the 1.0910/20 support band. A break lower would clear the way for a test under 1.0900.
View Live Chart for the EUR/USD
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
How will US Dollar react to Fed policy announcements – LIVE
The Federal Reserve (Fed) is widely expected to lower the policy rate by 25 bps to the range of 4.5%-4.75% after the November meeting. Chairman Powell's comments on the policy outlook in the aftermath of Donald Trump's victory could drive the USD's valuation.
EUR/USD extends recovery toward 1.0800 as USD retreats ahead of Fed
EUR/USD continues to push higher toward 1.0800 on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trump win-inspired USD longs ahead of the Federal Reserve's highly-anticipated policy announcements.
GBP/USD rebounds above 1.2950 after BoE policy announcements
GBP/USD trades in positive territory above 1.2950 on Thursday. The Bank of England (BoE) lowered the policy rate by 25 basis points as expected but the upward revision to inflation projections helped the pair edge higher. Market focus now shifts to the Fed's policy decisions.
Gold nears $2,700 as Fed’s announcement looms
Gold recovers following Wednesday's sharp decline and trades above $2,680. The benchmark 10-year US Treasury bond yield edges lower after Trump-inspired upsurge, allowing XAU/USD to hold its ground ahead of the Fed policy decisions.
Outlook for the markets under Trump 2.0
On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.