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US Dollar and EUR/USD Outlook CPI, ECB, and Powell Set the Stage for a High-Stakes Forex Week

Introduction

The global foreign exchange market enters a critical phase as the US Dollar stabilizes after Non-Farm Payrolls (NFP), while traders shift focus toward upcoming CPI data, central bank signals, and escalating geopolitical risks. Currency pairs like EUR/USD and GBP/USD are at technical and psychological crossroads, with momentum slowing near key resistance levels.

As inflation data, ECB policy decisions, and Jerome Powell’s commentary converge in the same week, volatility risks are rising sharply. The question now dominating markets: Can EUR/USD hold above 1.17, or is a deeper pullback imminent?

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US Dollar Price Forecast Stability After NFP, CPI Takes Center Stage

The US Dollar has shown signs of short-term stabilization following the latest Non-Farm Payrolls report, which delivered neither a decisive bullish nor bearish surprise. While job creation remained resilient, wage growth and participation data cooled expectations of aggressive tightening.

Key Drivers for the Dollar:

• CPI Inflation Data (Upcoming): A hotter-than-expected print could reignite USD strength
• Federal Reserve Communication: Markets remain sensitive to any shift in tone
• Global Risk Sentiment: War-related uncertainty is supporting safe-haven demand intermittently

Despite the recent pause, the Dollar Index (DXY) remains structurally supported, especially if inflation proves sticky and rate cuts are pushed further out.

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EUR/USD Forecast Momentum Slows Near 1.18

Current Technical Picture

EUR/USD has struggled to maintain traction above 1.18, with price action suggesting momentum exhaustion after a strong multi-week rally. Buyers remain active, but conviction is fading as traders wait for macro confirmation.

Key Levels to Watch:

• Resistance: 1.1800 – 1.1850
• Support: 1.1700 (critical psychological level)
• Breakdown Risk Below: 1.1650

A sustained move above 1.18 would require clear dovish signals from the Federal Reserve or a hawkish surprise from the ECB.

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CPI and ECB A Double Test for EUR/USD

Can 1.17 Survive?

This week presents a rare double-risk event:

1. US CPI Release
2. ECB Policy Decision

If US inflation surprises to the upside while the ECB maintains a cautious tone, EUR/USD could easily slip below 1.17, triggering profit-taking and momentum-based selling.

Conversely, a soft CPI print combined with ECB confidence in inflation normalization could revive upside momentum.

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ECB Decision: Upside Momentum Still Alive For Now

Despite short-term consolidation, EUR/USD’s broader trend remains constructive, supported by

• Improving Eurozone growth sentiment
• Reduced energy price pressures
• Stabilizing inflation expectations

However, the ECB must walk a fine line. Any hint of premature easing or concern over growth could weaken the euro sharply.

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GBP/USD Outlook Riding the Same Storm

GBP/USD is mirroring euro price action, though with higher volatility due to domestic UK economic uncertainties. Inflation persistence in the UK keeps the Bank of England cautious, but the pound remains vulnerable to US dollar strength.

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War and Geopolitical Risks The Hidden Variable

Geopolitical tensions continue to act as a wildcard, influencing:

• Risk sentiment
• Safe-haven flows into USD
• Energy prices, indirectly impacting inflation

Any escalation could quickly override technical signals, strengthening the dollar regardless of data outcomes.

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Jerome Powell’s Speech Markets Listening Closely

Fed Chair Jerome Powell’s upcoming remarks may prove just as impactful as CPI data. Traders will be watching for

• Confirmation of “higher for longer” rates
• Acknowledgment of slowing inflation momentum
• Commentary on global risks and financial stability

Even subtle changes in tone could reshape short-term FX trends.

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Weekly Forecast Summary

Pair	Bias	Key Risk
EUR/USD	Neutral-Bullish Above 1.17	CPI + ECB surprise
GBP/USD	Volatile, Range-Bound	USD strength
USD Index	Consolidating	Inflation data

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ltas Opinion Caution Is the Smart Trade

From Altas’ perspective, this is not a week for blind trend-following. While EUR/USD’s long-term structure remains bullish, short-term risk is skewed toward volatility and pullbacks.

Altas believes:

• 1.17 is the battlefield
• CPI will define direction, not technicals
• ECB clarity matters more than rate decisions

In this environment, capital preservation and disciplined entries matter more than chasing breakouts.

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Frequently Asked Questions (FAQs)

❓ Why is EUR/USD struggling near 1.18?

Because momentum is fading amid uncertainty ahead of CPI data and the ECB decision.

❓ Is 1.17 a strong support level?

Yes. A clean break below 1.17 could trigger deeper downside toward 1.1650 or lower.

❓ How does CPI affect EUR/USD?

Higher US inflation strengthens the dollar, pushing EUR/USD lower; weaker CPI does the opposite.

❓ Will Jerome Powell move markets?

Yes. His tone often shifts rate expectations and USD direction.

❓ Is the euro still bullish long-term?

Structurally yes, but short-term risks are elevated.

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Final Thoughts

With inflation data, central bank decisions, geopolitical risks, and Powell’s speech all colliding, the forex market faces a decisive moment. Whether EUR/USD holds 1.17 or slips lower will define the near-term trend.

One thing is certain: this is not a quiet week for currency traders.

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