• The EUR/USD outlook shows a pullback from a six-week high.
• The ECB cut interest rates by 25-bps as expected.
• The dollar limped to the end of the week after downbeat data this week.

The EUR/USD outlook shows a pullback from a six-week high hit after a hawkish European Central Bank policy meeting. At the same time, market participants were gearing up for the US nonfarm payrolls report for clues on future Fed moves. 

The ECB cut interest rates by 25-bps as expected. However, policymakers sounded more hawkish than expected, leading to a sharp rally in the euro. After the rate cut, President Christine Lagarde said the central bank was now in a good place. This meant that they were now able to face the pressures of weaker growth from US tariffs. She also noted that the ECB was nearing the end of its easing cycle. 

Nevertheless, market participants expect one more rate cut this year. Still, they have pushed back the timing for another move. Already, inflation in the Eurozone has eased to 1.9%, according to data on Tuesday. Therefore, there is less pressure to lower borrowing costs.

On the other hand, the dollar limped to the end of the week after downbeat data this week. At the same time, slow progress on trade negotiations weighed. Traders are now watching the NFP report that might reveal more weakness in the labor sector. 
 

EUR/USD key events today

• US average hourly earnings m/m
• US nonfarm employment change
• US unemployment rate
   

EUR/USD technical outlook: Bulls fail to sustain sharp rally

(Click on image to enlarge)

EUR/USD 4-hour chart

On the technical side, the EUR/USD price has pulled back after a sharp rally. Despite the pullback, the bias remains bullish as the price trades above the 30-SMA, with the RSI above 50. Bulls got a sudden surge in momentum that neared the 1.1500 key psychological level. However, they could not sustain the move, allowing bears to trigger a retreat. 

The price is currently nearing a solid support zone comprising the 30-SMA and the 1.1401 key level. Given the bullish bias, the price might bounce higher to retest the 1.1500 level. A break above this level will strengthen the bullish bias by making a new high in the uptrend. 

However, after the large wicked move, bears might push the price below the nearest support zone. Still, they would have to break below the support trendline as well to confirm a likely reversal.

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