• Traders maintained caution ahead of monetary policy decisions from various central banks.
• The US May inflation data will be released on Tuesday.
• Economists anticipate the ECB to raise its key interest rate by 25 basis points.

Today’s EUR/USD forecast is bullish. The dollar fell on Monday against the euro as traders maintained caution ahead of monetary policy decisions from various central banks, including the Federal Reserve. 

Notably, investors will watch policy meetings by the Fed, the European Central Bank (ECB), and the Bank of Japan. These will establish the prevailing sentiment and contain indications from policymakers regarding the future trajectory of interest rates.

In addition, the US May inflation data will come out on Tuesday, coinciding with the start of the Fed’s two-day meeting. Based on the CME FedWatch tool, money markets are leaning towards the Fed pausing on Wednesday. 

On the other hand, most economists anticipate the ECB to raise its key interest rate by 25bps this week, with another hike in July. Finally, it will halt for the remainder of the year.

Aside from the specific decisions made by the central banks during these meetings, the focus will be on their forward guidance. Given the aggressive rate hikes undertaken by central banks in the past 12-15 months, there is interest in whether they are preparing for a pause. This would follow the example set by the Reserve Bank of New Zealand.

Surprisingly, the RBNZ signaled that it had finished tightening, having raised rates to the highest level in over 14 years at 5.5%.

EUR/USD Key Events Today

No key economic releases are scheduled for today from the US or the Eurozone. Therefore, investors will likely keep speculating on the upcoming inflation report and the FOMC meeting.

EUR/USD Technical Forecast: Bulls Propel To 1.0785 Resistance

EUR/USD 4-hour chart

EUR/USD has suddenly shot up after pausing and pulling back from the 1.0785 resistance level. The bulls returned when the price got close to the 30-SMA support. The price has now risen farther away from the SMA, strengthening the bullish bias. Moreover, the RSI has moved closer to the overbought region, signaling solid bullish momentum. 

However, the price is nearing the 1.0785 resistance level, where it might pause again. Given the strong momentum, bulls might cross this resistance to target the next resistance at 1.0825.

Economists anticipate the ECB to raise its key interest rate by 25 basis points. The US May inflation data will be released on Tuesday.

https://www.forexcrunch.com/eur-usd-forecast-dollar-weakens-ahead-of-policy-meetings/