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EUR/USD Price Forecast: Nears $1.0728 Amid ECB Rate Cut Signals and US PPI Data

The EUR/USD exchange rate demonstrated a slight downtrend, trading near 1.0728 during the early hours of the Asian session on Friday.

EUR/USD Price Chart - Source: Tradingview

This movement comes as the US Dollar finds modest support due to increasing expectations of a Federal Reserve rate cut anticipated for September, which has somewhat dampened the appeal of the Euro.

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European Central Bank’s Stance on Interest Rates

On Thursday, the European Central Bank (ECB) maintained its interest rates at a record high of 4.0% for the fifth consecutive session. Despite the stable rate environment, the ECB signalled potential easing as early as June, a move that aligns with market anticipations of a 25 basis point reduction, according to data from LSEG.

U.S. Inflation Data and Rate Cut Prospects

In the United States, the Producer Price Index (PPI) for March indicated a softer inflation landscape than expected, rising by only 0.2% month-on-month against a forecast of 0.3%.

This year-over-year increase of 2.1% marks the largest since April 2023, with the Core PPI, which excludes volatile food and energy prices, advancing 2.4%—surpassing expectations.

Despite these figures, the impact on markets was subdued, with the CME FedWatch Tool now pricing in just two rate cuts for the year, likely starting in September.

Anticipation of Key Economic Indicators

Market participants are also keenly awaiting the release of Germany’s inflation data for March and preliminary figures from the US Michigan Consumer Sentiment Index, expected later on Friday. These data points could provide further clarity on the economic backdrop influencing the EUR/USD pricing and future central bank decisions.

In summary, the interplay between anticipated rate cuts by the Fed and ECB, coupled with incoming economic data, continues to shape the landscape for the EUR/USD. The prevailing expectation of an ECB rate cut before the Fed may continue to exert downward pressure on the Euro, affecting future movements of the EUR/USD pair.

EUR/USD Price Forecast: Technical Outlook

Today’s technical outlook for EUR/USD shows a modest decline, with the pair trading at $1.07123, a decrease of 0.13%. The current pivot point stands at $1.0752, indicating a key level for future price direction.

Immediate resistance levels are positioned at $1.0793, $1.0844, and $1.0902, challenging upward moves. Support is found at $1.0696, with further levels at $1.0652 and $1.0614, which may stabilize declines.

The Relative Strength Index (RSI) at 28 suggests that the EUR/USD is currently oversold, potentially limiting further downside. The 50-Day Exponential Moving Average (EMA) at $1.0795 reinforces resistance near the pivot.

EUR/USD Price Chart - Source: Tradingview

Overall, maintaining below $1.0752 suggests a bearish trend, while breaking above this could tilt the bias back to bullish.

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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