EURUSD Prediction: The Euro Rises Against As Markets Wait for PCE Data

EURUSD returned to the upside on Thursday, gaining 0.3 percent to trade at 1.0721 in the New York session. The US dollar was contained despite forecast-beating releases by the US economy, underlining investors’ forecast on the Personal Consumption Expenditure (PCE) figures set for release on Friday. The euro has gained 0.3 percent over the dollar this week, and could break a three-week losing streak if the PCE data comes in lower-than-expected.

Thursday saw the release of multiple US economic data, headlined by the Q1 2024 GDP reading. The final reading of the US economic performance showed that the GDP grew by 1.4 percent in the first quarter, beating the forecast estimate 1.3 percent. Similarly, Initial Jobless Claims for the week ending June 20 outperformed expectations, coming in at 233,000 against a forecast figure of 236,000.

However, traders chose to ignore these figures, choosing instead to wait for the May PCE figures set for release on Friday. Notably, the greenback was already under pressure after the US New Home Sales figures declined significantly in May to 619k from April’s 698k. Furthermore, it also fell short of the forecast figure of 636k. Therefore, these will keep exerting pressure on the dollar in the near-term. Durable goods orders rose unexpectedly by 0.1 percent in May, significantly higher than the forecast figure of minus 0.5 percent.

Meanwhile, the euro’s gains will likely be limited by the negative sentiment around France’s forthcoming snap elections. French, Spanish and Italian CPI data could also inject fresh volatility into the EURUSD pair on Friday. Furthermore, pronouncements from the EU Leaders Summit and Eurogroup Meetings could weigh in on the pair’s trajectory.

Technical analysis

The momentum on the EURUSD pair is currently in favour of the buyers, and the upside will likely prevail if the exchange rate stays above 1.0714. That could see the first resistance encountered at 1.0726, beyond which the pair could move further up to test 1.0735. Conversely, a move below 1.0714 will favour the sellers to take control of the market, with the first support likely to come at 1.0706. Extended control by the sellers could break the support, thereby invalidating the upward narrative and potentially sending EURUSD lower to test 1.0699.