The US dollar is on a downward trajectory on Friday, hovering around 1.0686 after a brief pause. The dollar experienced a temporary dip due to mixed US economic indicators and market anticipation of the critical PCE core inflation report, a significant factor in the Federal Reserve's decision-making.
Yesterday's data showed a larger-than-expected decline in US jobless claims and a modest increase in durable goods orders for May, although core PCE fell. Final GDP figures for the first quarter of 2024 were adjusted slightly upward, showing the US economy grew by 1.4% compared to the previously estimated 1.3%, in contrast to the 3.4% growth seen in the fourth quarter of 2023.
US Treasury yields also saw a slight decline, contributing to the dollar's brief decline. However, market dynamics are changing as focus intensifies on today's economic releases, including core PCE data, personal income and spending, and the University of Michigan's May Consumer Confidence Index.
EUR/USD technical analysis
EUR/USD completed a bearish move to 1.0666 and corrected to 1.0715. Currently, the market is forming another bearish wave, with a target at 1.0655. If this level is reached, a bounce to 1.0690 is possible before continuing the downtrend towards at least 1.0577. This bearish outlook is supported by the MACD indicator, which remains below zero with a firm downward trajectory.
On the H1 chart, EUR/USD is consolidating around 1.0690. A break lower could lead to a continuation of the decline to 1.0655. Subsequently, there could be a corrective move to 1.0690 before a further decline to 1.0640. The stochastic oscillator, hovering near 20, suggests the possibility of further declines before a rebound to 80 can occur, indicating short-term volatile moves.
Market outlook
Investors are advised to closely monitor upcoming US economic data, which will likely influence the Federal Reserve's policy expectations and affect EUR/USD movements. The currency pair remains sensitive to changes in US economic indicators and signals from the Federal Reserve regarding interest rates.
By RoboForex Analysis Department
Disclaimer: The forecasts contained in this document are based on the personal opinion of the author. This analysis cannot be considered as trading advice. RoboForex takes no responsibility for trading results based on the trading recommendations and reviews contained herein.
