• Markets are nearly sure that the European Central Bank will cut rates today.

• The Bank of Canada opened the door to more global rate cuts.

• Data from the US revealed a bigger-than-expected decline in private employment in May.

The EUR/USD forecast leans slightly bullish as the euro remains steady ahead of the ECB policy meeting, where a rate cut is widely anticipated. Despite the looming rate cut, the euro has strengthened, primarily due to the dollar’s decline amid rising expectations of a Fed rate cut.

Markets are nearly sure that the European Central Bank will cut rates today, becoming the second major central bank to do so. The Bank of Canada started its rate-cutting cycle in the previous session, opening the door to more global rate cuts.

However, recent data from the Eurozone revealed hotter-than-expected inflation, which has raised uncertainty about the outlook after June. Therefore, investors will pay close attention to Christine Lagarde’s speech after the policy meeting.

Meanwhile, data from the US revealed a bigger-than-expected decline in private employment in May. Jobs fell from 188K to 152K, indicating easing labor market conditions. This report followed the US job openings report, which showed a decline in vacancies. However, another report on Wednesday from the Institute for Supply Management showed a shift to expansion in the services sector that slightly complicated the outlook for Fed rate cuts.

Nevertheless, by the end of the day, the likelihood of a rate cut in September had risen to 69% from 59%. Moreover, investors were betting on at least 50 basis points of Fed rate cuts in 2024, which weighed on the dollar.

EUR/USD key events today

• ECB main refinancing rate
• ECB monetary policy statement
• US unemployment claims
• ECB press conference

EUR/USD technical forecast: Price consolidates near 1.0880 key level

On the technical side, the EUR/USD price trades in a sideways move near the 1.0880 key level. However, the bias is bullish because the price sits above the 30-SMA, and the RSI is slightly above 50. Bulls recently made a new high above 1.0880 but could not sustain a move higher. As a result, the price has pulled back to retest the 30-SMA.

A break below the SMA would indicate solid bearish momentum, allowing EUR/USD to retest the 1.0800 support level. However, if the SMA holds firm as support, the price will likely seek higher highs, with the first target at 1.0925.

https://www.forexcrunch.com/blog/2024/06/06/eur-usd-forecast-steady-ahead-of-pivotal-ecb-meeting/