Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0050.
- Add a stop-loss at 0.9900.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop 0.9925 and a take-profit at 0.9850.
- Add a stop-loss at 1.0025.
The EUR/USD price made a bullish breakout after the latest American house price index data. It rose to a high of 0.9976, which was the highest level since October 5 of this year. The pair has risen by almost 5% from its monthly low and is only a few pips below parity.
Fed pivot likely
The EUR/USD pair rose after the US published relatively weak economic data. In a report, Conference Board said that consumer confidence dropped from 107.8 in September to 102.5 in October. This decline was worse than the median estimate of 106.5. Consumer confidence is an important metric since it is a leading indicator of spending.
Additional data showed that the house price index (HPI) declined by 0.7% in August after falling by 0.6% in the previous month. The index dropped from 394.6 to 392 as mortgage rates continued rising. These numbers came a day after the US published weak flash manufacturing and services PMI numbers.
Therefore, these numbers mean that there is a likelihood that the Federal Reserve will slow its rate hikes. Some officials, including James Bullard, have hinted that the Fed could start pivoting as soon as in its December meeting.
Meanwhile, there are some positives from Europe. Data published on Tuesday showed that business confidence was starting to rebound in Germany. Business expectations rose from 75.3 in September to 75.6 in October. The Ifo business climate dropped slightly to 84.3.
This trend is mostly because European gas prices have retreated slightly recently. Prices dropped below 100 euros for the first time since Russia slashed supplies since summer. Warmer weather, reduced gas consumption, and close-to-full gas storage has eased concerns about winter shortages.
There will be no major catalyst for the EUR/USD pair. Instead, the market will be focused on the upcoming ECB decision.
EUR/USD forecast
The EUR/USD pair has been in a recovery mode recently. As a result, it managed to form a symmetrical triangle pattern. It managed to move above the upper side of this pattern.
It moved above the 50-day moving average while the Relative Strength Index (RSI) moved above the overbought level. The pair also rose above the 50% Fibonacci Retracement level. Therefore, the pair will likely keep rising as buyers target the resistance point at 1.0050.
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