• The ECB did not provide clear guidance on the outlook for rate cuts.

• Economists believe two more rate cuts will be in the Eurozone this year.

• US unemployment claims jumped to 243,000 in the last week.

The EUR/USD outlook points south as the euro falls after an ambiguous European Central Bank meeting. Meanwhile, the dollar recovered slightly after mixed economic data from the US in the previous session.

On Thursday, the ECB maintained rates but did not provide clear guidance on the outlook for rate cuts in the year’s second half, saying inflation remains high. However, forecasts showed that the central bank expects inflation to continue declining.

Furthermore, policymakers have lost the confidence they had before the June meeting. Initially, inflation in the Eurozone had been on a clear downtrend. As a result, the ECB committed to cut rates in June. However, as the meeting approached, it became clear that inflation had stalled. Therefore, although the central bank cut rates, some experts felt it was rushed. Others said the ECB only cut because it had committed to do it.

Economists believe there will be two more rate cuts in the Eurozone in September and December. However, at the meeting on Thursday, the message was that September was open. This means the outlook will depend on incoming data.

On the other hand, the dollar recovered from its lows on Thursday after a set of mixed economic reports. The unemployment claims jumped to 243,000 in the last week, beating forecasts for 230,000. Meanwhile, manufacturing activity in the US Atlantic region grew more than expected in July.

EUR/USD key events today

There will be no key reports from the Eurozone or the US today. As a result, investors will continue digesting yesterday’s ECB meeting.

EUR/USD technical outlook: Bearish momentum targets 1.0840 support

On the technical side, the EUR/USD price trades below the 30-SMA with the RSI under 50, showing a bearish trend. The shift in sentiment came after the RSI made a bearish divergence with the price. This was a sign that the previous bullish trend had reached a point where bulls were tired.

As a result, bears took control with a break below the 30-SMA. At the moment, they are eyeing the 1.0840 support level. The price must now make lower lows and highs to confirm a bearish trend. Otherwise, the price might start consolidating or resume the bullish trend.

https://www.forexcrunch.com/blog/2024/07/19/eur-usd-outlook-euro-slides-after-ecbs-uncertain-outlook/