Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0740.
- Add a stop-loss at 1.0680.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0710 and a take-profit at 1.0680.
- Add a stop-loss at 1.0800.
The EUR/USD pair was flat on Tuesday morning as attention turned to Thursday’s US GDP and Friday’s Personal Consumption Expenditure (PCE) report. It was trading at 1.0720, a few points above Tuesday’s low of 1.0690.
US consumer confidence data
The EUR/USD pair has been relatively calm this week as traders continue to reflect on the recent Fed and ECB meetings. In its meeting this month, the ECB decided to slash interest rates by 0.25% as it had signaled before.
The bank also noted that it will be patient when determining when to deliver the next rate cut. Analysts anticipate either one or two cuts this year since the bloc’s inflation has started to rise again. It rose to 2.6% in May, its highest point in three months and the rate cut will likely fuel more inflation.
Meanwhile, in the United States, the Federal Resere decided to leave interest rates unchanged again between 5.25% and 5.50%. The bank warned that inflation was still so high since it has constantly remained above the Fed’s target of 2.0%.
In recent statements, Fed officials have asked for patience, with most of them predicting that the bank will deliver one cut this year. That cut is expected to happen in December after the US concludes the election.
The EUR/USD pair reacted mildly to the better-than-expected consumer confidence report. According to the Conference Board, the country’s consumer confidence dropped from 101.3 in May to 100.4 in June. The drop was better than the expected 100.
The US also released a weak house price index (HPI) report. House prices dropped from 6.7% in April to 6.3% in May. House prices have remained steady this year because of higher inflation and low inventories in the country.
The next data that could move the EUR/USD pair will be the upcoming US PCE report scheduled for Friday. That is an important inflation data since it includes products and services in both rural and urban areas.
EUR/USD technical analysis
The EUR/USD pair formed a small double-bottom pattern at 1.0670 on June 14th and 21st. It has now remained below the 61.8% Fibonacci retracement point and the 50-period moving average, signalling that bears are still in control.
The pair remains below the 50% retracement point at 1.0758 and the important resistance level at 1.0760, its highest swing on June 8th. It has also formed a small doji pattern, a popular reversal sign.
Therefore, the pair will likely remain in this range on Wednesday as traders wait for the final reading of Q1 GDP data and the upcoming PCE report.
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