EUR/USD Forecast: Near-term consolidation remains in the pipeline

• 
  EUR/USD
  traded
  with
  a
  mild
  bid
  bias
  around
  1.0820.
• 
  The
  Greenback
  navigated
  a
  vacillating
  session
  ahead
  of
  the
  US
  CPI.
• 
  There
  was
  no
  news
  from
  Powell’s
  second
  testimony.

The
US
Dollar
(USD)
alternated
gains
with
losses
on
Wednesday,
prompting
the
USD
Index
(DXY)
to
end
the
session
barely
changed
from
the
previous
day’s
closing
levels.

This
irresolute
price
action
in
the
Greenback
motivated
EUR/USD
to
also
hover
around
the
1.0820
region,
up
marginally
for
the
day,
as
investors
digested
the
second
Congressional
testimony
by
Chair
Jerome
Powell
before
Congress.

While
Powell’s
message
largely
matched
his
previous
comments,
he
suggested
that
he
was
not
yet
ready
to
conclude
that
inflation
was
sustainably
decreasing
to
2%,
though
he
expressed
“some
confidence”
that
it
was
heading
in
that
direction.

Following
Powell’s
testimony,
the
macroeconomic
environment
remained
relatively
stable
on
both
sides
of
the
Atlantic.
That
is,
while
the
European
Central
Bank
(ECB)
is
contemplating
further
rate
cuts
beyond
the
summer,
with
market
expectations
suggesting
two
additional
cuts
by
the
end
of
the
year,
there
is
ongoing
debate
among
investors
about
whether
the

Fed
will
implement
one
or
two
rate
cuts
this
year,
despite
the
Fed’s
current
projection
of
a
single
cut,
likely
in
December.

According
to
the
CME
Group’s
FedWatch
Tool,
there
is
approximately
a
74%
chance
of
interest
rate
cuts
in
September,
rising
to
nearly
96%
by
December.

The
ECB’s
rate
cut
in
June,
combined
with
the
Fed’s
decision
to
maintain
rates,
has
widened
the
policy
divergence
between
the
two
central
banks.
This
divergence
could
potentially
lead
to
further
weakening
of
EUR/USD
in
the
short
term.

However,
the
prospects
of
economic
recovery
in
the

Eurozone,
along
with
signs
of
cooling
in
some
key
US
economic

indicators,
may
mitigate
this
disparity
and
occasionally
support
the
pair
in
the
near
future.

Moving
forward,
market
participants
should
closely
follow
the
release
of
US
inflation
figures
tracked
by
the
CPI
on
Thursday,
as
those
readings
could
impact
on
the
timing
of
the
interest
rate
cut
by
the
Fed.

EUR/USD
daily
chart

EUR/USD
short-term
technical
outlook

EUR/USD
is
expected
to
meet
its
initial
up-barrier
at
the
July
peak
of
1.0845
(July
8),
followed
by
the
weekly
high
of
1.0852
(June
12)
and
the
June
top
of
1.0916
(June
4).
If
the
pair
breaks
above
this
level,
it
might
bring
the
March
peak
of
1.0981
(March
8)
back
into
focus,
followed
by
the
psychological
1.1000
mark.

If
bears
regain
the
upper
hand,
spot
may
approach
the
200-day
SMA
at
1.0800
before
falling
to
a
low
of
1.0666
on
June
26.
From
here,
the
May
low
of
1.0649
(May
1)
leads
to
the
2024
bottom
of
1.0601
(April
16).

Looking
at
the
big
picture,
it
appears
that
additional
gains
are
on
the
way
if
the
important
200-day
SMA
is
consistently
surpassed.

So
far,
the
4-hour
chart
shows
some
gradual
recovery.
The
200-SMA
at
1.0783
provides
the
initial
contention,
followed
by
the
55-SMA
at
1.0781
and
finally
1.0709.
On
the
upside,
the
initial
obstacle
is
at
1.0845,
followed
by
1.0852
and
1.0902.
The
Relative
Strength
Index
(RSI)
has
decreased
to
about
53.