• US consumer prices witnessed their slowest growth in over two years.

• The US reported a 0.2% decrease in US import prices last month.

• Investors have decreased the likelihood of additional rate hikes later this year.

The EUR/USD weekly forecast is bullish as the market sees optimism regarding ending the Fed’s tightening cycle. 

Ups and downs of EUR/USD

Last week, the US released consumer and producer price inflation figures, indicating a decline in price pressures. Consequently, the dollar hit its lowest point in 15 months, and there was a surge in the euro. The US inflation data instilled optimism among investors regarding the approaching conclusion of the Fede’s rate-hiking phase. 

Data revealed that US consumer prices witnessed their slowest growth in over two years. Additionally, Thursday’s data showed the smallest increase in US producer inflation in almost three years. Furthermore, on Friday, the government reported a 0.2% decrease in US import prices last month.

Money market traders expect the Federal Reserve to increase rates by 25 basis points on July 26. However, they have decreased the likelihood of additional rate hikes later this year.

Next week’s key events for EUR/USD

After a week with such important events as the US inflation report, the EUR/USD will have a mostly quiet week. Next week has very little in terms of major economic releases. The US will release data on sales and employment.

The retail sales data will show how consumer spending is faring amid rising interest rates. Since consumer spending drives the economy, higher-than-expected sales could change the outlook for Fed interest rates.

The weekly jobless claims report will paint a picture of the US labor market, which remains tight despite high rates.

EUR/USD weekly technical forecast: Bulls surge beyond key levels

EUR/USD has made massive bullish candles, indicating a strong bullish move that has easily crossed above resistance levels. Furthermore, the price now sits far above the 22-SMA. This indicates bullish control that can also be seen in the overbought RSI.

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After respecting the 22-SMA as support, EUR/USD went on to break above multiple resistance levels. These include the 1.1001, 1.1105, and 1.1200 resistance levels. In the coming week, we might see the price pull back slightly to retest one or two of these key levels. Still, the bullish bias is strong, and bulls will likely seek higher prices.

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