Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0510.
- Add a stop-loss at 1.020.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0250 and a take-profit at 1.0150.
- Add a stop-loss at 1.0350.
The EUR/USD price held steady as the US dollar retreat continued. It rose to a high of 1.0360, which was the highest level since August 11 after the dovish statement from Fed officials. The pair has risen by over 8% from its lowest point this year.
US dollar retreat continues
The EUR/USD price has been in a strong upward trend in the past few days. This rally continued after the European Union published strong industrial production data. According to Eurostat, production rose by 0.9% in September even as energy prices continued.
The bloc’s production was lifted by an 11.9% increase in Irish production, which tends to be highly volatile. Also, production increased as companies brought forward production to avoid high energy costs during Winter.
The next key data to watch will be the first estimate of European GDP data scheduled for Tuesday morning. Economists expect the data to show that prices avoided a recession narrowly in Q3. They expect the data to show that the economy expanded by 0.2% in Q3 leading to a YoY increase of 2.1%.
The EUR/USD price also rallied after another dovish statement by a Fed official. In an interview with Bloomberg, Lael Brainard said that it willbe necessary to slow the pace of rate hikes. She said:
“I think what’s really important to emphasize is we’ve done a lot but we have additional work to do both on raising rates and sustaining restraint to bring inflation down to 2% over time.”
Other Fed officials have hinted that the bank will slow the pace of rate hikes. Last week, Loretta Mester and Mary Daly hinted that it will hike rates at a slower pace.
The Fed has delivered four 0.75% rate hikes and shrunk its balance sheet by over $235 billion to $8.7 trillion. The US will publish the latest producer price index (PPI) data on Tuesday.
EUR/USD forecast
The EUR/USD price has been in a strong bullish trend in the past few days. On the 4H chart, the pair moved above the standard pivot point. It also jumped above the important resistance level at 1.019, the highest point since September 12.
The upward trend has been supported by the 25-day and 50-day moving averages. Its Stochastic Oscillator has moved to the overbought level. Therefore, the pair will likely continue rising as buyers target the first resistance at 1.0510.
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