Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0650.
- Add a stop-loss at 1.0420.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0430 and a take-profit at 1.0350.
- Add a stop-loss at 1.0550.
The EUR/USD price continued its relentless comeback as investors focused on the likelihood of a Federal Reserve pivot. It rose to a high of 1.0540, which was the highest level since June this year. The pair has pared most of this year’s losses as it has risen by 10% from its lowest level this year.
US non-farm payrolls data
The EUR/USD price has been in a strong bullish trend in the past few weeks as the focus remains on the Federal Reserve. In his first statement in weeks, Jerome Powell confirmed that the bank will start reducing the size of interest rate hikes in its upcoming meeting. He also warned that rates will remain high for longer.
As a result, analysts expect that the Federal Reserve will likely hike interest rates by 0.50% in its December meeting. If this happens, the Fed will have hiked by 450 basis points this year. It will also continue paring back its balance sheet through its quantitative tightening policy. If this happens, it willl bring the benchmark rate between 4.25% and 4.50%.
The EUR/USD pair rose after the US published strong job numbers. According to the Bureau of Labor Statistics (BLS), the economy added 263k jobs in November after adding over 200k jobs in October. The unemployment rate remained unchanged at 3.7% while average hourly earnings grew by 5.1% in November.
The pair rose ahead of the upcoming EU and US services PMI numbers. Economists expect that the ISM non-manufacturing PMI dropped from 54.4 in October to 53.1 in November. A PMI reading of 50 and above is usually a sign of growth. However, they also expect the reading by S&P to remain at 46.1 in November.
The EUR/USD pair will also react to the latest European retail sales numbers. Economists expect the data to show that sales dropped by 2.6% and 1.7% in October on a YoY and MoM basis, respectively.
EUR/USD forecast
The four-hour chart shows that the EUR/USD price has been in a strong bullish trend in the past few days. It has rallied above all moving averages while Bollinger Bands have widened. The Relative Strength Index (RSI) and the Stochastic Oscillator have moved above the overbought level. It has also risen above the important resistance at 1.0497, the highest point on November 28.
Therefore, the pair will likely continue rising as buyers target the key resistance at 1.0550. The stop-loss of this trade will be at 1.0425.
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