Bearish view
- Sell the EUR/USD pair and set a take-profit at 0.9850.
- Add a stop-loss at 1.0025.
- Timeline: 1 day.
Bullish view
- Set a buy-stop at 1.0010 and a take-profit at 1.0100.
- Add a stop-loss at 0.9925.
The EUR/USD price moved sideways on Thursday morning as investors waited for the upcoming European Central Bank (ECB) minutes. The pair was trading at 0.9962, which was slightly above this week’s low of 0.9900.
ECB minutes, US GDP, and Jackson Hole
The EUR/USD sell-off paused slightly ahead of the upcoming minutes by the ECB. These minutes will provide more color about the deliberations that happened in the committee during the July meeting. In it, the members decided to hike interest rates for the first time in 11 years. It hiked by 0.50% and hinted that more increases were coming.
Therefore, the minutes will shed more light on whether the committee expects rates to keep rising even as the economic crisis escalates. In addition to high inflation, Europe is facing additional challenges like a prolonged drought that has led to substantially low water levels in key rivers. At the same time, the bloc risks power rationing in winter.
The EUR/USD price will react to the latest German GDP and business sentiment data. Based on the first estimate, analysts expect that the German economy expanded by 1.5% year-on-year in the second quarter. The country is under intense pressure because of its reliance on German natural has.
Meanwhile, analysts expect data by the IFO Institute to show that business climate, current assessment, and expectations dropped sharply in August. This will be in line with the relatively weak flash manufacturing and services PMI numbers that were published on Tuesday.
In the United States, the main event will be the Jackson Hole Symposium where central bank officials will have a chance to reset expectations. Jerome Powell’s speech will be the headline event. Christine Lagarde will not attend the event.
The second reading of US GDP data will not significantly impact the pair unless there is a major change. Data published in July showed that the economy moved to a recession in Q2 as it contracted by 0.8%.
EUR/USD Forecast
The EUR/USD pair has been in a strong bearish trend in the past few weeks. It moved from this month’s high of 1.0368 to below the parity level. On the four-hour chart, it dropped below the important support at 1.0095 and the 25-day and 50-day moving averages,
It has also formed what looks like a bearish consolidation pattern. Therefore, the pair will likely resume the downward trend and retest the key support at 0.9850.
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