- Recent trades of the EUR/USD pair have been predominantly bullish, with bulls successfully driving the pair towards the resistance level of 1.1190, closing the previous week near these gains.
- Recently, the upward rebound of the pair came in response to investors' reactions to recent decisions by global central banks.
- Decisively, this week will feature statements from several US Federal Reserve officials that will further clarify the bank's recent decisions and its future plans for upcoming meetings.
According to stock trading platforms, the US Dow Jones Industrial Average closed at a new record high. US stocks closed a volatile session mixed on Friday, with uncertainty prevailing following the previous session's surge, which was fuelled by the US Federal Reserve's interest rate cut. The S&P 500 and Nasdaq indices declined by 0.2% and 0.3%, respectively. Meanwhile, the Dow Jones added 36 points, extending its previous day's record close. Federal Reserve policymakers expressed differing views on inflation, with Governor Christopher Waller supporting a half-point cut in US interest rates due to favourable inflation data. Presently, Governor Michelle Bowman, the lone dissenter, warned that it could signal a premature victory over inflation.
Among stocks, FedEx shares declined by 15.2% after posting weak earnings and lowering revenue forecasts. Meanwhile, Nike shares rose by 6.9% after announcing Elliott Hill as its new CEO. Despite the decline, stocks recorded a winning week, with the S&P 500 rising 1.3%, the Nasdaq advancing 2.1%, and the Dow Jones adding 0.8%.
Similarly, European stocks closed the week sharply lower. on Friday, European stocks closed sharply lower and erasing the sharp gains made in the previous session, as markets continued to assess the outlook for financial conditions this year following a series of global central bank decisions last week. The Bank of Japan kept its interest rate unchanged but indicated that policy normalization would continue, while the People's Bank of China kept interest rates unchanged despite some bets on cuts amid the easing provided by the Federal Reserve. Automakers led the losses in the session, led by a 6.7% decline in Mercedes shares after the company lowered its full-year financial forecast due to the rapid deterioration of its business in China. Stellantis, Volkswagen, and BMW shares fell more than 3%. Meanwhile, ASML shares fell 4.2%, completely erasing its previous session's gains, setting the pace for technology stocks in the currency bloc. Shares of LVMH, Hermes, and Kering also declined by more than 3% each amid a Jefferies warning about luxury. On the other hand, banks avoided a sharp decline.
What will affect the Euro/Dollar this week?
According to the economic calendar, in the United States, all eyes will be on the Personal Consumption Expenditure (PCE) inflation report. Both the core and headline PCE price indices are expected to rise by 0.2%, matching the previous month. Moreover, Personal income is expected to rise by 0.4%, slightly higher than the previous 0.3%. Also, consumer spending is likely to grow at a slower pace of 0.3%. S&P Global's preliminary purchasing managers' indices are expected to show a slightly slower contraction in the manufacturing sector while service sector growth slows.
At the same time, traders will focus on the appearances of several officials, including Fed Chairman Powell and Treasury Secretary Yellen at the 2024 Treasury Market Conference hosted by the Federal Reserve Bank of New York. Other key indicators to watch include final Q2 GDP growth figures, durable goods orders, CB Consumer Confidence, regional PMIs including the Chicago Fed National Activity Index, Richmond Fed Manufacturing Index, Kansas Fed Manufacturing Index, FHFA Housing Index, S&P/Case-Shiller Home Price Index, new and pending home sales, and final Michigan Consumer Sentiment figures.
In Europe, preliminary purchasing managers' indices estimates will provide an update on September's economic performance. The Eurozone and Germany are expected to see continued contraction in the manufacturing sector and slowing growth in services. Furthermore, the German business climate index is expected to decline, while consumer confidence may rise. Also, Germany will release unemployment figures, along with loans to households and businesses and businesses and consumer sentiment in the Eurozone; preliminary inflation figures for France and Spain; and business and consumer confidence in Italy.
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EUR/USD Technical analysis and forecast:
According to the performance on the daily chart attached, the price of the Euro against the US Dollar EUR/USD is on an upward channel path and crossing the resistance barrier of 1.1200 will enhance the bulls’ control. Thus, it prepares the pair to move towards stronger upward levels. Technically, the next of which will be 1.1265, 1.1330 and 1.1400 respectively, all of which will strengthen the technical indicators.
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