EUR – Inflation data shows no sign of hindering the Fed's path to rate cuts, but the U.S. dollar remains under pressure

The U.S. dollar rose before retreating last week. Trump's increased influence on monetary policy and his attempt to fire Fed Governor Tim Cook put further pressure on the dollar. Cook filed a lawsuit last Thursday, arguing that Trump had no authority to remove her. Data released on Friday showed that the US core PCE price index rose 0.3% month-over-month in July, unchanged from the previous month and in line with market expectations. The core PCE rose 2.9% year-over-year, a five-month high. The PCE price index rose 0.2% month-over-month in July, in line with expectations, and remained stable at 2.6% year-over-year. The inflation data reinforced expectations that the Fed may cut interest rates in September.

The EUR/USD exchange rate has been range-bound for the past two weeks, fluctuating between approximately 1.1570 and 1.1730, suggesting a potential correction. However, given that the 10-day moving average has broken below the 25-day moving average, the chances of a breakout are slightly higher. 1.1730 represents a recent downtrend line, with resistance seen at 1.18 and even 1.1829 on July 1. A break above this level could further solidify the euro's upward trend. Extended targets include 1.20 and 1.2150. Nearer support is anticipated at the 25-day moving average of 1.1620 and 1.1570, with the next level at 1.15.

Forecast Range:
Resistance: 1.1730 - 1.1830 - 1.2000* - 1.2150
Support: 1.1620 - 1.1570 - 1.1520 - 1.1480

Focus:
Monday
Eurozone Manufacturing PMI
Eurozone July Unemployment Rate (5:00 PM)

Tuesday
Eurozone August Health and Care Index (HICP) (5:00 PM)

Wednesday
Eurozone August Services PMI

Thursday
Eurozone July Retail Sales

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