• Powell restated the possibility of consecutive interest rate hikes.

• Lagarde solidified expectations for the ninth consecutive ECB rate hike.

• Lagarde acknowledged the possibility of the stagnant Eurozone economy slipping into a recession this year.

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Today’s EUR/USD forecast is bullish. The euro rose on Thursday after hawkish comments from ECB president Christine Lagarde. On Wednesday, leaders of the world’s major central banks reiterated their belief that further tightening of policies would be necessary. This is to control persistently high inflation. 

However, they also expressed confidence that this could be achieved without triggering full-blown recessions.

Notably, US Federal Reserve Chairman Jerome Powell restated the possibility of consecutive interest rate hikes. Additionally, ECB President Christine Lagarde solidified expectations for the ninth consecutive increase in Eurozone rates in July. 

Powell specifically highlighted the need for the US labor market to undergo further softening to alleviate price pressures. Although he acknowledged a “significant probability” of a downturn, he clarified that it was not the most likely scenario.

On the other hand, Lagarde acknowledged the possibility of the stagnant Eurozone economy slipping into a recession this year. Nonetheless, she emphasized that such a situation was not the ECB’s primary expectation. 

The Federal Reserve kept rates unchanged this month. However, market projections indicate anticipation of rate increases next month or in September. Furthermore, they project potential reductions starting next year.

Forecasts indicate that the ECB is expected to raise rates in July and September. However, investors are speculating that as the economic outlook worsens, the ECB may reverse course and begin lowering borrowing costs in 2024.

EUR/USD Key Events Today

Investors will receive inflation data from German, which is a leading indicator for Eurozone inflation. There will also be reports from the US including GDP, initial jobless claims, and pending home sales.

EUR/USD Technical Forecast: Price Stalls At Crucial 1.0900 Level

EUR/USD 4-hour chart

EUR/USD is in a bearish move on the 4-hour chart. The price trades below the 30-SMA while the RSI is under 50, supporting bearish momentum. However, the bearish move has paused as bears have encountered the 1.0900 key level.

For the bearish move to continue, the price needs to detach from this key level. A continuation of the bearish move would likely retest the 1.0851 support. However, a break above the 30-SMA would allow bulls to retest the 1.1000 key resistance level.

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