Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1100.
- Add a stop-loss at 1.0940.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0980 and a take-profit at 1.0900.
- Add a stop-loss at 1.1100.
The EUR/USD exchange rate moved sideways on Monday morning ahead of the important interest rate decisions by the Federal Reserve and the European Central Bank (ECB). The pair was trading at 1.1018, a few points above last week’s low of 1.0965.
Fed and ECB decisions
The most important catalysts for the EUR/USD will be the upcoming interest rate decisions by the Fed and the European Central Bank. These will be important decisions since the two central banks did not make decisions in April.
The Fed will come first and deliver its decision on Wednesday. Analysts are unsure what to expect when the bank meets this time. The most recent minutes showed that some officials were concerned about more rate hikes in March because of the banking crisis.
Therefore, there is a likelihood that the bank will continue these deliberations because of the vulnerability of the banking sector. For one, there are still cracks in the industry as First Republic Bank collapses. Many regional banks are also exposed to the commercial real estate sector. Therefore, there is a possibility that the Fed will hike by 0.25% and then point to a strategic pause.
The European Central Bank will conclude its meeting on Thursday. And because the European economy seems stronger than the American one, there is a likelihood that the bank will hike interest rates by 0.25%.
There will be several important economic data this week. For example, in Europe, Eurostat will publish the latest flash inflation numbers on Tuesday. The data is expected to show that the headline CPI rose to 7.0% while the core CPI remained at 5.7%.
Meanwhile, the US will publish the latest non-farm payrolls (NFP) data on Friday. Analysts expect that the economy added 185k jobs as the unemployment rate remained at 3.6%.
EUR/USD technical analysis
The EUR/USD pair has been in a bullish trend in the past few weeks. It rose from a low of 1.0520 in March to a high of 1.1092 in April. The pair formed an ascending channel and is now at the middle level. It is hovering slightly above the 50-period moving average while the MACD is a few points above the neutral point.
Therefore, the pair will likely remain in a tight range on Monday since most European countries will be on holiday for Labor Day.
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