EUR/USD Forecast: Check out how this currency pair will Perform this week.

16-19 / July /2024

The European Central Bank, which already lowered interest rates in June, will be in the spotlight this week. This time, no rate cuts from the ECB are anticipated, which, along with less political unpredictability in Europe and dismal US data, should all work to sustain the euro's strength versus the US dollar and support bulls' short-term EUR/USD projection.

Introduction

Following the release of the US Empire State Manufacturing Index, which was lower than anticipated previously, the EUR/USD broke over the June high of 1.0916 to achieve its highest level since March. With last week's dovish RBNZ meeting, the US dollar has continued to face pressure against most major currencies but not as much against the likes of the New Zealand dollar. However, the US dollar has depreciated more versus gold and other currencies like the euro and pound after last week's weaker-than-expected US CPI data raised hopes that the Federal Reserve would ease monetary policy at its September meeting. The European Central Bank, which already lowered interest rates in June, will be in the spotlight this week. This time, no rate cuts from the ECB are anticipated, which, along with less political unpredictability in Europe and dismal US data, should all work to sustain the euro's strength versus the US dollar and support bulls' short-term EUR/USD projection.

Critical Macroeconomic pointers to check this week?

?The US economic calendar is rather calm this week, with the exception of retail sales and a few other macro indicators. If not for the ECB's policy announcement on Thursday, the same might be said of Europe's data schedule. The main macro highlights for this week that pertain to the EUR/USD pair are as follows:

The Empire State Manufacturing Index has already printed this week at a lower-than-expected -6.6, keeping the pressure on the US dollar. However, Tuesday is all about retail sales, as figures on industrial production and building permits are also released at that time.

Forecasted fall of US Retail Sales?

The US consumer is becoming worse, as evidenced by the May retail sales estimate released last month, which increased by just 0.1% on a month-over-month basis. It came after an April decline of 0.2% that was downwardly corrected. The previous time around, sales at petrol stations were very poor, declining 2.2%, while sales at furniture stores, which show a desire for durable items, decreased 1.1%. In the meantime, inflation has reduced more than anticipated, and recent data releases have generally been surprising in the negative. The likelihood of a September rate decrease could increase if retail sales continue to underperform, particularly in light of last week's poor consumer inflation data and the University of Michigan's Inflation Expectations poll.

The Decision on ECB Rate

The next rate decision from the European Central Bank is scheduled for Thursday, July 18, at 13:15 BST. After delivering its first-rate cut in June, don't expect any pyrotechnics this time. Even if officials were uncertain about the direction of inflation, they were forced to make that cut since the ECB had built up the decision so much. In fact, the ECB staff members' view of inflation has subsequently become more dubious, according to the meeting minutes, and there was no clear sign that private consumption was improving either. Christine Lagarde stated at the most recent press conference in June that the ECB will continue to be data-dependent and that there will be no pre-commitment to a specific rate path. Thus, at this meeting, don't expect another rate cut, but keep an eye out for hints regarding the next step.

EURUSD Chart Analysis?

Two bearish trend lines that had been present since July and December of last year have been broken by the EUR/USD. The rates have also fluctuated and maintained their superiority over both the 100-exponential and 21-day exponential moving means. Because of this, the technical prediction for EUR/USD is currently positive. However, considering that it has faltered earlier in the year in the vicinity of 1.0900 and 1.1000, I wouldn't be shocked if it stayed here for a few days, possibly until the ECB rate decision is over. To be sure, the short-term path of least resistance is obviously upward, so unless the charts indicate otherwise, I wouldn't necessarily look for bearish bets here. When that resistance level is broken, the key short-term support is expected to be around the 1.0840–1.0865 range, which was our prior strong resistance line. The 100 Exponential Moving Average is currently located at 1.0800.