Advertisement
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1065.
- Add a stop-loss at 1.0900.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0910 and a take-profit at 1.0800.
- Add a stop-loss at 1.1045.
The GBP/USD pair rose slightly on Tuesday as the US dollar sell-off continued. It rose to a high of 1.0980, which was higher than this week’s low of 1.0915. The pair has dropped from the year-to-date high of 1.1075.
European inflation data ahead
The European Union is having a strong recovery in the past few months, helped by the services sector and the overall energy prices. As a result, most analysts expect that the bloc will expand by 3.5% in 2023 as exports rise.
This recovcry has given the European Central Bank (ECB) more reasons to continue hiking interest rates. A survey published this week showed that most economists expect that the ECB will deliver at least three 0.25% rate hikes this year. If this happens, it will be the most hawkish the bank has been in years.
The ECB, like the Federal Reserve, has committed to be data-dependent in determining whether it will hike rates. One of the key data it will watch is inflation. On Wednesday, Eurostat will publish the final inflation data for March.
Based on the flash estimate, analysts expect the data to show that the headline CPI dropped from 8.5% in February to 6.9% in March. The core CPI, on the other hand, is expected to come in at 5.7% from the previous 5.6%.
Most European countries have seen inflation pullback recently. For example, in Spain, the headline CPI has dropped to 3.3%, a few points above the ECB target of 2.0%.
Still, there are positive signs that inflation will continue falling even when central banks pause their rate hikes. On Tuesday, data by the Canadian statistics agency showed that the headline and core inflation dropped to 4.3%. The BoC has not hiked rates in the past three meetings.
EUR/USD technical analysis
The EUR/USD pair has formed an ascending channel shown in red. On Monday, the pair managed to retest the lower side of this channel and then bounced back. It has now moved slightly above the 50-period moving average, signaling that bulls are retaking control.
The pair has moved back to the Woodie pivot point. Therefore, the outlook of the pair is neutral. A move above the resistance point at 1.100 will signal that bulls have prevailed, which will see it rising to last week’s high of 1.1073. On the other hand, a drop below this week’s low of 1.0915 will validate the bearish case.
Ready to trade our free trading signals? We’ve made a list of the top 10 forex brokers in the world worth trading with.