During the early European session on Friday, the EUR/USD pair lost traction, hitting an intra-day low of $1.0805.

The stronger US dollar and weaker sentiment around the Euro have driven this downward trend. Traders are reacting to upbeat US economic data and increasing speculations about potential interest rate cuts by the European Central Bank (ECB). These factors have contributed to the bearish performance of the EUR/USD pair.

ECB Rate Cut Speculations Weigh on the Euro

The Euro has been under pressure due to growing expectations that the ECB may cut interest rates in June. Comments from ECB President Christine Lagarde, expressing confidence in Eurozone inflation control, have fueled this outlook. Financial markets have priced in a 25 basis point (bps) rate cut, further weakening the Euro.

Upbeat US Economic Data Supports the US Dollar

The US dollar has strengthened on the back of stronger-than-expected US economic data. The latest S&P Global flash May Composite PMI data showed significant improvement, climbing to 54.4 from 51.3 in April, the highest level since April 2022. The Manufacturing PMI rose to 50.9 from 50.0, and the Services PMI increased to 54.8 from 51.3, both exceeding market expectations. Additionally, weekly Initial Jobless Claims dropped to 215,000 from 223,000, indicating a robust labor market.

Hawkish Fed Comments Influence Market Sentiment

Atlanta Fed President Raphael Bostic suggested the US central bank might delay cutting interest rates due to persistent inflationary pressures. His hawkish remarks have reinforced market expectations of prolonged higher interest rates in the US, putting further pressure on the EUR/USD pair by strengthening the US dollar.

EUR/USD Price Forecast: Technical Outlook

The EUR/USD pair is currently trading at $1.0810, down 0.07%. The technical outlook suggests mixed sentiment as the price hovers around the pivot point of $1.0806. Immediate resistance is observed at $1.0828, followed by $1.0853 and $1.0882. On the downside, immediate support is noted at $1.0784, with further support levels at $1.0767 and $1.0751.

The Relative Strength Index (RSI) is currently at 38, indicating the pair is approaching oversold conditions, suggesting potential for a reversal or stabilization. The 50-day Exponential Moving Average (EMA) at $1.0846 serves as significant resistance.

For traders, an entry strategy would be to buy above $1.0806, aiming for a take-profit level of $1.0840 and setting a stop-loss at $1.0785. This approach leverages potential upward movement while managing downside risks.

In summary, the EUR/USD is experiencing a slight decline with mixed technical signals. The pivot point at $1.0806 is crucial for determining the next move, with resistance and support levels providing key areas to watch.