EUR/USD Price Forecast: Declines to near 1.1650, overbought signals curb upside bias

The EUR/USD pair is trading close to 1.1650 on Wednesday, with overbought signals dampening the pair's upside potential. The decline is attributed to a strengthening US Dollar (USD), amid cautious market sentiment ahead of the US July Personal Consumption Expenditures (PCE) Price Index release. Economists anticipate a persistent inflationary environment due to Middle East energy risks, with Core PCE (excluding food and energy) set to increase by 3.3% YoY in July.

A potential US interest rate hike in September, priced at nearly 38.4% probability, could buoy the Greenback, while Federal Reserve Chairman Kevin Warsh's speech at the Jackson Hole symposium on Friday may shed light on future rate outlook. Analysts at UOB Group note that EUR/USD has broken out of a tight range, previously expecting consolidation, with price action invalidating their prior view.

After a dip to 1.1650, the Euro is now showing tentative upward momentum and could test the 1.1695 level, while the next resistance is at 1.1710. On the downside, support lies at 1.1665 and 1.1655, with a potential break signaling weakness in the bullish structure. Technical analysis indicates that EUR/USD remains above the 100-day simple moving average and 20-day Bollinger middle band, with the Relative Strength Index nearing overbought territory.