Bullish View
- Set a buy-stop at 1.0700 and a take-profit at 1.0750.
- Add a stop-loss at 1.0600.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.0630 and a take-profit at 1.0550.
- Add a stop-loss at 1.0750.
The EUR/USD pair continued its bearish trend as the strength of the US dollar continued. The pair crashed to a low of 1.0645, which was the lowest level since March 2020. The euro also declined against other currencies like the Japanese yen and Swiss franc.
King Dollar Strength Continues
A main theme in the market this week has been the strength of the US dollar. The dollar index jumped to a high of 102.23, which was the highest level since 2020. The currency rallied against most currencies, including the British pound, Swiss franc, and Canadian dollar.
The dollar rallied as tensions between western countries and Russia rose. On Tuesday, Russia threatened that it would deliver proportionate attacks if Ukraine attacks targets in Russia. At the same time, Germany said that it had reduced its Russian oil imports dramatically since the war started. It also said that it could reduce the volume of oil that it buys from Russia further.
The EUR/USD declined even after the relatively mixed data from the US. According to the US, new home sales declined from 835k in February to 763k in March. This decline was worse than the median estimate of 765k. However, additional numbers revealed that home prices kept rising. Precisely, the house price index rose by 2.1% on a MoM basis and by 19.4% on a YoY basis.
The most important data published was on consumer confidence. With inflation surging, the country’s consumer confidence declined from 107.6 to 107.3. Analysts were expecting that confidence rose to 108.0.
Therefore, as American data continues to disappoint, there is a possibility that the Fed will start thinking about slowing the tightening process. The key events to watch today will be the German consumer confidence and a speech by Christine Lagarde.
EUR/USD Forecast
The four-hour chart shows that the EUR/USD pair continued its bearish trend this week. The pair has crossed the important support level at 1.0756, which was the lowest level this month. At the same time, it has dropped below the 25-day and 50-day moving averages and the Ichimoku cloud. Oscillators have moved below the oversold level.
Therefore, the pair’s downward trend will continue in the coming days. However, a short pullback to about 1.0756 cannot be ruled out.
