• Investors are focused on the upcoming European Central Bank (ECB) policy meeting.

• Economists expect the ECB to raise interest rates by 25 basis points.

• Recent remarks from ECB policymakers have adopted a more dovish stance.

Today’s EUR/USD outlook is slightly bullish. The euro rose on Thursday as investors focused on the upcoming European Central Bank policy meeting. They hope to gain insight into its rate outlook.

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Notably, all economists in a Reuters poll expect the European Central Bank (ECB) to raise interest rates by 25 basis points on July 27. Furthermore, a slight majority of them now anticipate another hike in September.

Despite inflation in the Eurozone almost halving to 5.5% in June from its peak of 10.6% last October, the ECB remains undeterred. The bank projects inflation to stay persistently high and believes it has more ground to cover. 

So far, the ECB has implemented eight consecutive rate rises since July 2022, totaling 400 basis points. There are ongoing debates among investors and analysts about the number of additional hikes needed and the duration required to bring inflation to the 2% target. The ECB’s broadly hawkish commentary solidifies the belief that rate cuts are not forthcoming in the near future.

Meanwhile, the U.S. Federal Reserve will likely deliver its final hike in the current cycle a day before the ECB’s meeting. Consequently, the expectation of narrowing interest rate differentials has contributed to a 5% boost in the euro against the dollar this year.

However, recent remarks from ECB policymakers have adopted a more dovish stance. Governing council member Yannis Stournaras was the latest to suggest that the possibility of future rate increases beyond July remains uncertain.

EUR/USD key events today

All major economic releases will come from the US today. Investors will get data on employment, manufacturing, and the housing market.

EUR/USD technical outlook: Bulls set to push off the 1.1200 support.

On the charts, EUR/USD is caught in a tight consolidation with support at the 1.1200 level and resistance at the 30-SMA. However, the RSI trades above 50, showing bulls are slightly stronger. Therefore, there is a high chance bulls will break above the 30-SMA, climbing to the next resistance at 1.1300.

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Further supporting bulls is the fact that the trend before the pause above 1.1200 was bullish. Therefore, there is a likelihood the bullish trend will continue.

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