EUR/USD Weekly Forecast: Weak EU data caps gains

• A set of PMI figures revealed a significant drop in business activity in the Eurozone.

• US jobless claims fell, pointing to tight labor market conditions.

• US inflation rose 0.1% versus estimates of a 0.2% increase.

The EUR/USD weekly forecast shows a neutral bias as the Eurozone economy weakens and Fed rate cut bets increase.

EUR/USD Ups and Downs

EUR/USD fluctuated this week and ended mostly flat amid a mix of US and Eurozone data. As the week began, a set of PMI figures revealed a sharp drop in business activity in the eurozone. This increased pressure on the ECB to continue cutting interest rates, weighing on the euro.

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Meanwhile, business activity in the US remained steady as the economy remained resilient despite high interest rates. In addition, jobless claims fell, indicating tight labor market conditions.

However, the dollar weakened on Friday after the core PCE report revealed cooler than expected inflation. Price pressures rose 0.1% against estimates of a 0.2% increase, increasing the likelihood of another massive rate cut in November.

Next week’s key events for EUR/USD

Next week, market participants will pay attention to key US reports, including manufacturing activity and the non-farm payrolls report. Furthermore, Federal Reserve Chairman Jerome Powell will speak on Monday.

The focus of the week will be the monthly employment report. In particular, the Fed is paying close attention to the labor market for any weakness. At the last meeting, the central bank cut interest rates by 50 basis points, saying it was aimed at keeping the unemployment rate low. Traders will therefore be watching job growth and unemployment in September for clues on the Fed’s next policy move. Economists expect the economy to add 144,000 jobs in September.

EUR/USD Weekly Technical Forecast: Bulls show weakness at 1.1175 resistance

Technically, the EUR/USD price reviewed the resistance level of 1.1175, where it was broken. At the same time, the RSI made a bearish divergence, indicating the decline of the upward momentum. The price remained in a bullish trend, making higher highs and higher lows. However, the RSI has shown weakness in its latest move.

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Therefore, there is a chance that the price will reverse to challenge the 22-SMA and bullish trendline. A break below these levels would open the way to the 1.1000 support level. Here, the bears will struggle to break the previous low and start making lower highs and lows. Such a move would confirm the beginning of a bear trend.

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