The EURUSD currency pair is forming an uptrend

The dollar index was fluctuating near the lows of the previous session amid the uncertainty about the future monetary policy of the U.S. Federal Reserve.

According to Tim Waterer, chief market analyst at KCM Trade, initial jobless claims data further bolstered arguments in favor of the Fed's pause in June. The subsequent decline in government bond yields lowered the value of the U.S. dollar.

Now the focus is on the May U.S. consumer inflation report, which will be released on June 13 before the Fed meeting. The report will give investors more clarity on the state of the world's largest economy.

According to traders, there is a 73% chance that the Fed will keep rates unchanged on June 14, while there is a 27% probability of a quarter-point hike. 

Next week the European Central Bank (ECB) will announce its interest rate. Experts expect that the ECB would raise rates to 4%. Due to the high inflation such a scenario is certainly conceivable.

Moreover, the Eurozone has entered recession. Data from the Eurostat on economic growth dynamics show that the decline in GDP of the Eurozone in the fourth quarter of 2022 and the first quarter of 2023 amounted to 0.1% year-on-year.

Thus, as Eurostat points out, the consistent economic decline for two consecutive quarters shows that the Eurozone is in a state of technical recession.

The preliminary and interim estimates of Eurostat showed growth by 1.3% and 0.1%, respectively.

The revision of the statistical estimate is explained by a larger than expected industrial decline. First of all it concerns Germany.

The EURUSD price went beyond the downtrend on the H4 timeframe, which indicates a reversal.

In terms of wave analysis, the EURUSD price is forming the third ascending wave on the H1 timeframe. The breakout of the top of the first wave at 1.0780 has already taken place, indicating that the price is rising.

Signal:

The short-term outlook for the EURUSD pair is to buy. 

The target is at the level of 1.0935.

Part of the profit should be fixed at the level of 1.0850.

A stop-loss should be placed at the level of 1.0660.

The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.