- The EUR/USD outlook is positive amid a hawkish ECB and a weaker dollar.
- Tariff concerns and downbeat US CPI continue to weigh on the dollar.
- Trade talks and US PPI remain the limelight events for now.
The EUR/USD outlook stays strongly bullish as the pair breaks multi-month highs, nearing 1.1600 during the European session. The cooler US CPI print weighed heavily on the US dollar on Wednesday, lending room to the euro to maintain the bullish momentum.
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The Federal Reserve may cut the rates after summer, as the series of negative data suggests. According to the FedWatch tool, the probability of a rate cut in September rose to 60% from 50% previously.
The dollar’s mild recovery amid the trade truce between the US and China remained short-lived as President Trump announced to write letters to the trading partners who showed no will to negotiate in good faith.
There is no major event from the Eurozone this week. However, a series of commentaries from the ECB members has revealed President Lagarde’s message of ending the monetary policy cycle after reducing rates by 200 bps in the eight meetings.
Moreover, Lagarde also emphasized the role of the euro as a global reserve currency due to the ongoing economic shift. She said the role of the euro may be boosted in international trade due to currency shifts.
On the trade front, the EU-US negotiations may remain in the limelight as we are approaching to the deadline of July 09. EU officials believe that the deadline will be extended.
Key Events Ahead
- US PPI
- US unemployment claims
EUR/USD technical outlook: Bulls aiming for 1.1600 breakout
The EUR/USD is trading slightly above its swing high of 1.1580 marked on April 21. The bullish trendline and the 20-day SMA continue to maintain the buying pressure. However, the daily RSI value is near 70.0, which indicates a slightly overbought condition.
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Alternatively, a clear fall below the 20-day SMA can change the sentiment. Both the 20-SMA and the trendline support coincide around the 1.1350 area.
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