FX.co ★ EUR/USD. Analysis and Forecast

The EUR/USD pair is trading near the round level of 1.1700, or around yesterday's high. After the release of weak German retail sales data, the pair's momentum has stalled. Later in the day, preliminary German consumer price index (CPI) data will be published.

Germany's Federal Statistical Office (Destatis) reported on Friday that retail sales rose by 1.9% year-on-year in July after a sharp 4.9% increase in June. Forecasts had pointed to 2.6% growth. On a monthly basis, retail sales in July fell by 1.5% compared to a 1% increase in June and expectations for a 0.4% decline.

Additionally, EUR/USD is under pressure from slight U.S. dollar strength following stronger Q2 GDP figures. The U.S. economy expanded by 3.3% year-on-year, beating forecasts of 3.1% and the previous 3.0%.

Nevertheless, the dollar cannot gain strong momentum amid expectations of a September rate cut. According to Reuters, Fed Governor Christopher Waller said on Thursday that he would support a rate cut at the September meeting, along with additional cuts over the next three to six months to avoid a sharp deterioration in the labor market. Furthermore, U.S. Vice President J.D. Vance stated in an interview with USA Today that he intends to limit the Federal Reserve's autonomy.

For better trading opportunities and clearer insight into the dollar's future direction, attention today should be focused on the release of the U.S. Personal Consumption Expenditures (PCE) Price Index for July, due during the North American session. This indicator is a key inflation gauge ahead of the September Federal Reserve meeting. Forecasts point to a 2.6% year-on-year rise in headline PCE and a 2.9% increase in core PCE. Strong data may soften the current dovish expectations regarding the Fed's monetary policy outlook.

From a technical perspective, EUR/USD is still holding support at the 9-day EMA, maintaining bullish momentum despite the 14-day Relative Strength Index (RSI) drifting into near-neutral territory.

If the ongoing pullback gathers pace and the pair falls below the 9-day EMA toward support at 1.1630, then to the 1.1600 round level, and further below the August 27 low, bulls will start to lose control. A drop below the 100-day SMA would signal a decisive loss of bullish strength.

On the other hand, buyers need to break through resistance at the 1.1700 round level to test the three-week high near 1.1750. The next obstacle lies around 1.1770, followed by the July 24 high at 1.1780–1.1789, which will be the final defense line for sellers. Reaching the 1.1800 round level would mark a complete loss of bearish momentum.