EUR – US data shows economic resilience, while the dollar remains stable

Data released last Friday showed that the US Commerce Department reported stronger-than-expected personal income and consumer spending. The personal consumption expenditures (PCE) price index rose 0.3% month-over-month and 2.7% year-over-year in August, in line with expectations. PCE is the Federal Reserve's preferred inflation indicator. Market participants have been weighing signs of a strengthening economy against expectations of further interest rate cuts from the Fed. This month, the Fed cut rates for the first time since December and hinted at further cuts. Investors are also digesting recent comments from Fed officials. Richmond Federal Reserve President Thomas Barkin said in a Bloomberg Television interview that he has very low confidence in his inflation forecasts due to the continued impact of tariffs on the economy. However, Fed Vice Chair Michelle Bowman, citing recent labor market data, said now is the time to "act decisively and proactively address declining labor market dynamism and emerging signs of fragility."

As seen on the Euro/USD technical chart, the RSI and Stochastics continue to decline. Since briefly breaking below 1.18 in early July, the exchange rate has been repeatedly constrained within this range. Therefore, if the Euro fails to break above this range this week, further correction pressure will be apparent. The Euro is currently breaking below the upward trend line support formed by the recent month-long rally, a break that suggests a deepening decline. Based on the Golden Ratio, the 38.2% correction is at 1.1715, extending to 50% and 61.8% at 1.1655 and 1.1590, respectively. The next key support levels are 1.15 and 1.14. Upward resistance lies at the 25-day moving average at 1.1720 and 1.18, with higher resistance expected at 1.1850 and 1.1920.

Forecast range:
Resistance: 1.1720 - 1.1800 – 1.1850 – 1.1920
Support: 1.1590 – 1.1500 – 1.1400*

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