Market Analysis

EUR/USD remains above a two-week low of 1.0825 during Friday’s European session, trading within a narrow range. Investors are awaiting the release of the US core Personal Consumption Expenditures (PCE) price index for June, scheduled for 12:30 GMT.

Economists predict that core inflation will have slowed to 2.5% year-over-year in June, down from the previous 2.6%, with a monthly increase of 0.1%. This inflation data is expected to significantly impact market expectations regarding potential Federal Reserve (Fed) rate cuts. Currently, there is strong speculation about rate cuts in September. If inflation figures are softer than anticipated, this could bolster expectations for such cuts; conversely, stronger figures could reduce these expectations.

The US Dollar is showing a muted performance as investors await the inflation report, which will be crucial for determining the Fed’s stance on interest rates in its upcoming July 31 meeting. The Fed is widely expected to keep its key borrowing rates steady in the 5.25%-5.50% range.

Technical Analysis: EUR/USD Holds Above 1.0800

EUR/USD is trading within the range observed on Thursday as it awaits the US core PCE inflation data. The pair remains within a Symmetrical Triangle pattern on the daily chart after failing to sustain a breakout. EUR/USD continues to trade below the 20-day Exponential Moving Average (EMA), which is currently around 1.0840, potentially heading towards significant support levels near 1.0800 and 1.0700.

The 14-day Relative Strength Index (RSI) has returned to the 40.00-60.00 range, indicating that bullish momentum has waned.

On the upside, the key resistance level for the Euro bulls is 1.0900.

Paraphrasing text from "FX Street" all rights reserved by the original author.