Bearish View
Sell the EUR/USD and set a take-profit at 1.1500.
Add a stop-loss at 1.1650.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at 1.1600 and a take-profit at 1.1700.
Add a stop-loss at 1.1700.
The EUR/USD pair was in a tight range in the overnight session as investors waited for the closely-watched American inflation numbers. The pair is trading at 1.1572, where it has been in the past few days.
US Inflation Data Ahead
The US published strong employment numbers on Friday. The better-than-expected numbers showed that the country’s economy created more than 500k jobs in October while the unemployment rate declined to 4.6%.
In the past two days, the EUR/USD pair has remained in a tight range as investors watch the upcoming inflation numbers. The data, which will come out in the afternoon, is expected to show that the country’s inflation continued rising in October.
The median estimate among analysts polled by Reuters is that the headline CPI rose from 5.3% in September to 5.8% in October. If they are right, the data will be the highest since early 1990s. Core CPI, on the other hand, is expected to rise from 4.0% to 4.3%.
These numbers will be significantly higher than the Federal Reserve’s target of 2.0%. In its most recent interest rate decision, the Fed said that inflation will keep rising in the coming months and then moderate to about 2.0% in the coming year.
On Tuesday, data by the American government showed that the producer price index (PPI) rose by 8.6% in October while core PPI rose by 6.8%. These increases were relatively lower than the median estimate by analysts.
The other key movers for the EUR/USD pair will be the German inflation data that will come out in the morning session. The data is expected to show that inflation rose by 4.5% in October while the harmonised inflation rose by 4.6%. Europe’s inflation will likely get worse considering that gas prices are soaring.
EUR/USD Forecast
The hourly chart shows that the EUR/USD pair has been rising gradually in the past few days. It has even formed an ascending channel that is shown in green. It is currently along the lower side of this channel. Also, the pair has moved below the 38.2% Fibonacci retracement level. It is also approaching the standard pivot point while the MACD has continued dropping.
Therefore, the pair will likely keep falling as investors attempt to move below the key support level at 1.1500. This view will be invalidated if the price moves above 1.1615.
