EUR/USD Daily Forecast – Euro Falls Into a Range Ahead of Retail SalesEUR/USD seems to have fallen into a range below 1.1280 ahead of US retail sales which are scheduled for release today. I expect some volatility from the release, but I think the markets will be more focused on the Fed who are scheduled to meet next week.
Next Weeks Fed Meeting in Focus
I expect that the markets will be more focused on the Fed than retail sales. Simply put, there has been a significant shift in expectations with many analysts calling for as much as three rate cuts this year.
Next weeks meeting will clarify if policymakers are on the same page. Specifically, the markets will be looking for a signal whether they are ready to move, perhaps even as soon as the July meeting.
Much of the current rally in EUR/USD has been attributed to this shift. And, if confirmed, there’s potential for more upside.
I’m currently leaning towards a scenario where the markets will look to sell dollars after the initial reaction of the retail sales report, to position ahead of the Fed meeting.
A level to keep an eye on is 1.1280 into the US session. In early European trading, a push above it was attempted but the rally was not sustained.
The 4-hour chart shows clearly shows that the pair remains within a range. I think we might see some volatility in the US session, but considering it’s Friday I don’t expect a lot.
One thing to note, the 1.1260 measured move target for the bear flag confluences with a resistance level that was quite important last week. It essentially marked a breakout, and so I expect it will be defending on a retest.
- I see big support at 1.1260.
- A break above 1.1280 can open up the upside a bit.
- The Fed meeting next week stands to keep EUR/USD bid.