US Dollar Forecast: EUR/USD Bounces Back Ahead of Monthly Low
US Dollar Outlook: EUR/USD
EUR/USD snaps the series of lower highs and lows from last week as it bounces back ahead of the monthly low (1.0668), but the exchange rate may stage further attempts to test the May low (1.0650) as the Federal Reserve retains a restrictive policy.
US Dollar Forecast: EUR/USD Bounces Back Ahead of Monthly Low
EUR/USD may trade within the broad range from earlier this year as the 50-Day SMA (1.0771) no longer reflects a negative slope, and the exchange rate may retrace the decline from the monthly high (1.0916) as the update to the US Personal Consumption Expenditure (PCE) Price Index is anticipated to show slowing inflation.
Join David Song for the Weekly Fundamental Market Outlook webinar. David provides a market overview and takes questions in real-time. Register Here
US Economic Calendar
The core PCE, the Fed’s preferred gauge for inflation, is expected to narrow to 2.6% in May from 2.8% per annum the month prior, and evidence of slowing price growth may produce headwinds for the US Dollar as it encourages the Federal Open Market Committee (FOMC) to implement a rate-hike this year.
However, a higher-than-expected core PCE print may put pressure on the FOMC to further combat inflation, and signs of persistent price growth may generate a bullish reaction in the Greenback as raises the Fed’s scope to keep US interest rates higher for longer.
With that said, EUR/USD may stage further attempts to test the May low (1.0650) if it struggles to trade back above the 50-Day SMA (1.0771), but the exchange rate may retrace the decline from the monthly high (1.0916) as it snaps the series of lower highs and lows from last week.
EUR/USD Chart – Daily
Chart Prepared by David Song, Strategist; EUR/USD on TradingView
- EUR/USD bounces back ahead of the monthly low (1.0668) to hold within last week’s range, with a break/close above 1.0770 (38.2% Fibonacci retracement) raising the scope for a move towards the 1.0860 (50% Fibonacci retracement) to 1.00880 (23.6% Fibonacci extension) region.
- Next area of interest comes in around the monthly high (1.0916), but EUR/USD may track the broad range from earlier this year as the 50-Day SMA (1.0778) no longer reflects a negative slope.
- At the same time, EUR/USD may stage further attempts to test the May low (1.0650) if it struggles to push back above the moving average, with a breach below the 1.0610 (38.2% Fibonacci retracement) to 1.0640 (1.0640 (23.6% Fibonacci retracement) area bringing the April low (1.0601) on the radar.
Additional Market Outlooks
US Dollar Forecast: USD/JPY Rally Pushes RSI Towards Overbought Zone
Canadian Dollar Forecast: USD/CAD Ascending Channel Under Threat
--- Written by David Song, Strategist
Follow on Twitter at @DavidJSong
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Products and services available depend on your location and the entity holding your account. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
FOREX.com is a registered FCM and RFED with the CFTC and member of the National Futures Association (NFA # 0339826). Forex trading involves significant risk of loss and is not suitable for all investors. Full Disclosures and Risk Warning. Increased leverage increases risk.
GAIN Capital Group LLC (dba FOREX.com) 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA. GAIN Capital Group LLC is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2026