Euro Forecast: EUR/USD Eyes June High Ahead of ECB Rate Decision
Euro Outlook: EUR/USD
EUR/USD may attempt to test the June high (1.0916) ahead of the European Central Bank (ECB) interest rate decision as it extends the advance following the slowdown in the US Consumer Price Index (CPI).
Euro Forecast: EUR/USD Eyes June High Ahead of ECB Rate Decision
EUR/USD seems to be unfazed by the rise in the US Producer Price Index (PPI) as it climbs to a fresh monthly high (1.0909), and it remains to be seen if the Federal Reserve will switch gears later this year as the core PPI climbs to 3.0% in June from 2.6% per annum the month prior.
The rise in in factory-gate prices may push the Federal Open Market Committee (FOMC) to further combat inflation as Chairman Jerome Powell endorses data-dependent approach in front of US lawmakers, but Fed officials may continue to adjust the forward guidance for monetary policy as the central bank ‘projects that the appropriate level of the federal funds rate will be 5.1 percent at the end of this year.’
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
As a result, speculation for a looming Fed rate-cut may keep EUR/USD afloat ahead of the next interest rate decision on July 31, and the exchange rate may continue to carve a series of higher highs and lows going into the ECB meeting as the Governing Council is expected to retain the current policy.
Euro Economic Calendar
The ECB is expected to keep Euro Area interest rates on hold after implementing a 25bp rate-cut at the June meeting, and the meeting may fuel the recent advance in EUR/USD should the central bank promote at a meeting-by-meeting approach in managing monetary policy.
However, President Christine Lagarde and Co. may prepare households and businesses for a more accommodative stance as Euro Area inflation is ‘expected to decline towards our target over the second half of next year,’ and hints of a further change in regime may drag on EUR/USD as it raises the scope for another ECB rate-cut in 2024.
With that said, EUR/USD may struggle to retain the advance from earlier this month if it fails to test the June high (1.0916), but the exchange rate may stage a further advance ahead of the ECB meeting as it carves a series of higher highs and lows.
EUR/USD Chart – Daily
Chart Prepared by David Song, Strategist; EUR/USD on TradingView
- EUR/USD approaches the June high (1.0916) as it stages a three-day rally, with a breach above the 1.0940 (50% Fibonacci retracement) to 1.0960 (61.8% Fibonacci retracement) region bringing the March high (1.0981) on the radar.
- A further advance in EUR/USD may continue to push the Relative Strength Index (RSI) towards overbought territory, with the next area of interest comes in around the January high (1.1046).
- However, the recent series of higher highs and lows in EUR/USD may unravel if it struggles to hold above the 1.0860 (50% Fibonacci retracement) to 1.0880 (23.6% Fibonacci extension) region, with a move below 1.0770 (38.2% Fibonacci retracement) opening up the monthly low (1.0710).
Additional Market Outlooks
US Dollar Forecast: GBP/USD Rally Pushes RSI Towards Overbought Zone
USD/JPY Forecast: RSI Approaches Overbought Territory Again
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2025