- EUR/USD weekly forecast stays pressured by soft U.S. data and heightened Fed rate cut expectations amidst easing growth.
- The pair holds near 1.1750, with neutral RSI and SMAs indicating consolidation.
- A cooling momentum implies limited upside, while a sustained break above 1.1800 may lead to potential gains.
The EUR/USD pair traded evenly around 1.1750 last week. The pair sustained a mild bullish bias amid the renewed U.S. dollar weakness and stable Eurozone data.
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Due to the ongoing U.S. government shutdown, with Friday as the fifth day, the investor uncertainty has deepened. Consequently, it has delayed decisive releases like the Nonfarm Payrolls report and increased concerns about fiscal stability. The U.S. Dollar Index (DXY) holds near 97.75, highlighting investor vigilance and declining confidence in the Greenback.
U.S. economic data signaled waning momentum. The ISM Services PMI dropped to 50 from 52, reflecting stagnation in service sector growth, whereas the Employment Index maintained contraction at 47.2. Simultaneously, markets are pricing in a 95% possibility of a Fed rate cut in the forthcoming meeting, the CME FedWatch Tool reveals, as policymakers grapple with decelerating growth and fiscal disruptions.
The Eurozone side stays resilient. The HCOB composite PMI skyrocketed to 51.2, the highest since May, indicating moderate private-sector activity. In September, inflation rose to 2.2%, mildly above the ECB’s 2% target but within manageable limits.
ECB president Christine Lagarde affirmed the bloc’s economic stability, hinting at no immediate policy shifts. With the Fed favoring a dovish tone and the ECB upholding a neutral tone, EUR/USD stays supported by rising policy divergence.
Overall, if the U.S. political and fiscal uncertainty persists, the euro can approach 1.1820-1.1850.
EUR/USD Key Events Next Week
- Fed’s Bostic Speech (Tuesday).
- FOMC Minutes (Wednesday).
- ECB Monetary Policy Meeting Accounts (Thursday).
- Initial Jobless Claims (Thursday).
- Continuing Jobless Claims (Thursday).
EUR/USD Weekly Technical Forecast: Calm Before a Breakout
The EUR/USD hovers around a subdued consolidation zone between 1.1700 and 1.1750, signaling uncertainty ahead of U.S. developments. The 50-day SMA at 1.1677 provides support, whereas the 100-day SMA at 1.1616 and the 200-day SMA at 1.1191 stay below, indicating that the longer-term trend stays bullish.
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The RSI holds near 52, suggesting neutral momentum with space for a directional breakout. A steady move above 1.1750 may push EUR/USD toward 1.1820-1.1880. In case of a drop below 1.1670, there may be renewed selling toward 1.1610.
Provided the EUR/USD hovers above the 50-day SMA, the bias stays moderately bullish. However, RSI flattening close to mid-range implies momentum is softening, and an explicit breakout confirmation is required before the next directional move.
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