EUR/USD Surges Nearly 1% This Week—Could Trade Optimism Outsmart Weak US Data and Rewrite Market Rules?

Next week, the FOMC is in the spotlight

The US economic schedule will feature the Federal Open Market Committee (FOMC) meeting on July 29 – 30. The Fed is expected to hold rates unchanged, with a 98% chance of maintaining rates at around the 4.25%-4.50% range.

Daily digest market movers: EUR/USD consolidates after ECB’s decision, bad US data

• US Durable Goods Orders for June dropped 9.6% MoM, reversing sharply from May’s 16.5% surge, as demand for aircraft plummeted. Despite the decline, the figures came in better than the -10.8% contraction forecast by analysts, with the downturn led by transportation equipment, which fell 22.4% during the month. Core Durable Goods Orders—excluding the volatile transportation category—rose by 0.2%, signaling modest but continued strength in underlying business investment.
• On Thursday, better-than-expected Initial Jobless Claims pointed to continued labor market strength, even as S&P Global reported a contraction in manufacturing activity.
• In US trade developments, President Donald Trump announced that most trade deals are now finalized. He added that forthcoming letters are expected to outline tariff rates ranging from 10% to 15% and stated that the likelihood of an agreement with the EU is at a “50-50” chance.
• Despite this, EU member states are set to vote on EUR 93 billion of counter-tariffs on US goods on Thursday, and a broad majority of EU members would support using the anti-coercion instrument in the event of no US trade deal and US tariffs of 30%.
• The ECB kept rates unchanged at 2% as foreseen, with the statement highlighting that data have come broadly in line with the previous assessment, while adding that due to uncertainty, their approach would be meeting by meeting.
• Next week, the US economic docket will feature the Fed’s decision, Gross Domestic Product (GDP) preliminary figures for Q2, the release of Core PCE figures, and Nonfarm Payroll figures.
• In the EU, the schedule will feature Retail Sales in Germany and Spain, as well as inflation figures for Spain, Germany, and the EU. Traders are also eyeing the release of the GDP prints for the EU and Germany.

Technical outlook: EUR/USD consolidates at around 1.1750

EUR/USD is consolidating after hitting a weekly high of 1.1788, just shy of the key 1.1800 level. While the Relative Strength Index (RSI) remains in bullish territory, momentum is waning as the indicator nears its neutral zone.

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