- The EUR/USD forecast shows a rebound in the euro.
- The meeting between the US president and Ukraine’s president went south.
- Market participants are pricing a 79% chance of a Fed rate cut in June
The EUR/USD forecast shows a rebound in the euro after Britain came in to support Ukraine in its bid to end the war. Meanwhile, the dollar remained fragile after inflation data revealed weak consumer spending, raising Fed rate cut expectations.
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The euro collapsed on Friday after an anticipated meeting between the US president and Ukraine’s president went south. The hope of a peace deal between Russia and Ukraine through the US president has supported the Eurozone currency in recent weeks. However, things soured when Ukraine got suspicious of a secret deal between the US and Russia. Moreover, Zelenskiy complained that Putin was filling Trump with lies. As a result, tensions arose between Trump and Zelenskiy.
Their meeting on Friday ended badly as the top leaders exchanged harsh words. Consequently, hopes of a near-term peace deal collapsed. However, a meeting between Ukraine and Britain revived these hopes. Europe is ready to facilitate a deal between Ukraine and the US to end the war. Market participants will monitor further developments that will impact the euro.
On the other hand, Fed rate cut bets rose on Friday after data revealed a drop in US consumer spending. Market participants are now pricing a 79% chance of a cut in June, compared to 70% before the PCE report. Meanwhile, inflation came in line with expectations.
EUR/USD key events today
EUR/USD technical forecast: Bears stall at 0.5 Fib retracement
On the technical side, the EUR/USD price has paused near the 1.0400 key psychological level. The pause comes after a steep decline showing a bearish sentiment shift. The price trades below the 30-SMA, showing bears are in the lead. Meanwhile, the RSI sits below 50 in bearish territory.
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The decline paused when bears met a solid support zone comprising the 0.5 Fib retracement level and the 1.0400 key level. In this pause, bulls resurfaced, leading to a slight rebound. EUR/USD might retest the 30-SMA resistance before continuing lower. If the SMA holds firm, the price will retest the support zone.
A break below this zone would allow bears to target the 1.0301 support level. On the other hand, if the zone holds firm, the price will break above the SMA to retest the 1.0500 resistance level.
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