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• EUR/USD printed flat on Thursday as markets recover balance.
• Investors are refocusing on rate cut expectations.
• EU GDP, US CPI inflation prints due next week.

EUR/USD went nowhere fast on Thursday, testing the 1.0900 handle before wrapping up the day’s action close to where it started. Fiber flubbed a swing for the 1.1000 handle earlier this week, and momentum has drained out of the pair as investors continue to cool off after a surge of panic after last Friday’s misfire in US labor data.

Friday is set to wrap up the trading week with little of note on the economic data docket and investors pivoting once more to keeping an eye out for signs the Federal Reserve (Fed) will be pushed into a rate cutting cycle in the next six weeks.

At the current cut, rate traders are pricing in roughly two-to-one odds of a 50-basis-point rate trim from the Fed on September 18, with a further two cuts expected through the rest of 2024. According to the CME’s FedWatch Tool, rate probabilities see an 83% chance of the Fed’s benchmark fed funds rate hitting 425-450 basis points by the end of December.

US Initial Jobless Claims for the week ended August 2 printed at 233K, less than the forecast 240K and easing back from the previous week’s 250K. Cooling initial unemployment figures are helping investors keep a lid on recent downturn fears after last week’s US labor data dump sparked a firm risk-off bid.

US data watchers will be on the lookout for a fresh round of producer and consumer-level inflation figures due next week. US Producer Price Index (PPI) inflation is slated for next Tuesday, with Consumer Price Index (CPI) inflation on the books for next Wednesday. Euro traders will also be looking out for a pan-EU update to Gross Domestic Product (GDP) growth numbers slated for early Wednesday, which are expected to hold steady in the second quarter at 0.3% MoM and 0.6% YoY.

EUR/USD technical outlook
 

Fiber continues to trade on the high side of a rough descending channel that has weighed on EUR/USD for the duration of 2024. The pair is holding just outside of recent technical ceiling barriers, but bullish momentum remains crimped below 1.1000.

A rising pattern of higher lows is solidifying on daily candlesticks, but EUR/USD is still poised for another dip back into the 200-day Exponential Moving Average (EMA) near 1.0800.

EUR/USD daily chart
 

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