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Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0700.
- Add a stop-loss at 1.0550.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0550.
- Add a stop-loss at 1.0660.
The EUR/USD pair was flat on Thursday morning after the Fed published minutes of the September meeting. The exchange rate was trading at 1.0610, higher than last week’s low of 1.0447.
US inflation data ahead
The EUR/USD price was in a tight range as US bond yields continued falling. The 10-year bond yields dropped by 2% to 4.55% while the 30-year yield retreated by 1.6% to 4.74%. These yields have suffered a major reversal after they soared to the highest levels in over 20 years.
Government bonds and stocks rose while the US dollar index retreated after the Fed published September’s minutes. The minutes revealed that most members supported pausing rates in that meeting.
At the same time, the committee committed to proceed carefully when making the next decisions. Analysts expect the Fed will deliver at least one more rate hike this year, a move that would push them to between 5.50% and 5.75%, the highest level in decades.
There will be no European economic data on Thursday. Therefore, traders will focus on the upcoming US consumer price index (CPI) data. These numbers, together with last week’s non-farm payrolls (NFP) data, will help the Fed in making its decision.
Economists polled by Reuters expect the data to reveal that the headline consumer inflation rose by 3.6% in September while core CPI was 4.1%. The two had risen by 3.7% and 4.3% in August.
A higher inflation figure than expected will likely push the Fed to hike by 0.25% in its November 1st meeting. The US will also publish the latest initial and continuing jobless data while Fed’s Raphael Bostic will deliver a statement.
EUR/USD technical analysis
The EUR/USD pair has rebounded in the past few days. It has risen above the upper line of the descending channel. It has also formed a narrow ascending channel and moved above the 25-day and 50-day exponential moving averages (EMA).
The Relative Strength Index (RSI) has also formed a rising wedge pattern. The EUR/USD pair is also at a crucial level since it was the highest point on September 29th. Therefore, the pair will likely see some volatility after the US inflation data. The key support and resistance levels to watch will be at 1.0500 and 1.0700.
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