- The EUR/USD gains upward momentum as the DXY bulls cool off their heels.
- German retail sales saw their most significant drop in nearly three decades.
- Traders will look for the US ISM Manufacturing data later in the NA session.
The EUR/USD forecast remains bullish during the European session as the pair goes above 1.026. At the time of writing, the pair is trading at 1.02526.
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Another weak performance in the greenback added fuel to the pair’s continued comeback after it bottomed out around the 1.0100 area last week.
Indeed, a pessimistic attitude surrounds the greenback, keeping DXY under pressure as investors continue to examine last week’s disappointing GDP statistics (-0.9 percent), which revealed the US economy entered a technical recession in Q2.
German retail sales fell sharply
German Retail sales fell 8.8 percent in real terms in June compared to the same month last year, the worst loss since the time series started in 1994.
In the Eurozone, the Manufacturing PMI remained in negative territory in June, at 49.8, while the Unemployment Rate remained unchanged at 6.6 percent.
Inflation burden on ECB
Slowing Eurozone growth is weighing on the currency, and the possibility of fragmentation from heavily indebted nations such as Italy and Greece looms.
The ECB surprised markets by raising interest rates by 50 basis points at their most recent meeting.
EUR/USD key events to watch
The US PMI will come later during the North American session. It may entertain the traders and cap the pair’s gain.
Earlier, we had the Eurozone Manufacturing PMI.
What’s next to watch for EUR/USD forecast?
Meanwhile, price activity surrounding the European currency is anticipated to closely track dollar movements, geopolitical concerns, fragmentation fears, and the Fed-ECB rate hikes.
Besides this, traders should keep an eye out for EURUSD volatility based on Eurozone and US GDP and inflation figures.
EUR/USD technical forecast: Sees a slow upside momentum
EUR/USD has gained 0.25% so far. The pair is above its 100-day moving average on the 4H chart, and the RSI is around 60.
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EUR/USD is now hitting the 1.02526 level. A fall below 1.0146 will bring the pair towards the 1.01140 support level. If the pair dips below this level again, it will move to the next support level at 1.0096.
On the upside, the pair can reach the next resistance level at around 1.0270. A break over 1.0315 will pave the way for a test of the resistance level of 1.0376.
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