Bullish View
- Buy the EUR/USD pair and set a take-profit at 1.100.
- Add a stop-loss at 1.0800.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.0800 and a take-profit at 1.0750.
- Add a stop-loss at 1.0900.
The EUR/USD price rose slightly on Wednesday and early Thursday as investors wait for the latest European consumer inflation data. It rose to a high of 1.0851, which was the highest level since April 14th. This price is slightly above this week’s low of 1.0760.
EU Inflation Data Ahead
The EUR/USD pair tilted upwards after the positive Eurozone industrial production data. According to Eurostat, production rose from -0.7% in January to 0.7% in February. This increase led to a year-on-year increase of 2.0%. However, Eurostat warned that production will ease in the coming months because of the ongoing crisis in Ukraine.
Eurostat will publish the latest consumer inflation data on Thursday. Based on the preliminary numbers that were released recently, analysts expect that the headline CPI rose from 5.9% to 7.5% on a year-on-year basis. Excluding the volatile food and energy prices, analysts expect that the core CPI rose from 2.7% to 3.0%.
Economists expect that inflation will keep rising in the coming months as the cost of energy rises. The EU is contemplating putting an embargo on Russian oil while Germany has resisted banning natural gas. Still, an informal embargo is expected to happen soon since the EU has resisted paying for the country’s gas in ruble.
The EUR/USD pair will react to the latest economic data from the US. The Philadelphia Fed will publish the latest manufacturing index. With the cost of doing business rising, analysts expect that the index fell from 27.4 to 21.0. The Bureau of Labor Statistics will release last week’s initial and continuing jobless claims numbers.
The key mover for the pair will be speeches by Jerome Powell and Christine Lagarde. Powell will likely insist that higher rates and quantitative tightening will be needed to slow the rising inflation. Lagarde will also express caution.
EUR/USD Forecast
After days of declines, there are signs that the pair has bottomed. It is trading at 1.0850, which is slightly above this week’s low of 1.0757. It has also crossed the 25-day and 50-day moving averages while the MACD has crossed the neutral level. Other oscillators like the Chaikin and the Relative Strength Index (RSI) have also pointed upwards.
Therefore, there is a likelihood that the pair will keep rising as investors target the key resistance level at 1.1000. A drop below the support at 1.0800 will invalidate this view.
