The EUR/USD outlook indicates increased volatility as traders weigh ECB and Fed policy outlooks.
- ECB policymakers said the central bank was still in a good place.
- US unemployment claim increased sharply to 264,000, well above the forecast of 235,000.
The EUR/USD outlook indicates increased volatility as traders weigh a hawkish ECB and data supporting Fed rate cuts. The European Central Bank left rates unchanged on Thursday as expected. Meanwhile, employment figures in the previous session revealed further weakness in the US labor market.
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ECB policymakers took on a hawkish stance during the meeting on Thursday, saying the central bank was still in a good place. As a result, they left interest rates unchanged. At the same time, the president gave a positive view on growth and inflation. She noted that global tariff uncertainty had dropped after several trade deals.
“We continue to be in a good place,” ECB President Christine Lagarde told a press conference, adding that inflation was where the ECB wanted it to be and the economy was growing well.
After the meeting, traders were only pricing a 40% chance of one last rate cut by next spring. This outlook contrasted sharply with the Fed’s. Notably, monthly US inflation accelerated to 0.4%, beating estimates. Meanwhile, the annual figure came in at 2.9% as expected.
However, unemployment claim increased sharply to 264,000, well above the forecast of 235,000. This further highlighted the weakness in the labor market that will pressure the Fed to lower borrowing costs.
EUR/USD key events today
- Preliminary University of Michigan Consumer Sentiment
- Preliminary University of Michigan Inflation Expectations
EUR/USD technical outlook: Bulls make another attempt to break out
On the technical side, the EUR/USD price is challenging its range resistance. After a previous false breakout, bulls have again punctured the 1.1720 resistance level. However, bears are also struggling to keep the price below the SMA.
During its last swing, EUR/USD broke above its range resistance and swung high before pulling back sharply in a whiplash move. Moreover, the price fell back into the consolidation and broke below the 30-SMA, a sign that it was not ready to start trending.
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However, bulls are making another attempt to start an uptrend. It will only succeed if the price breaks above the range resistance and starts respecting the 30-SMA as support. Otherwise, bears will return to push the price to the range support, continuing the sideways move.
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