Bearish view
- Set a sell-stop at 1.0666 and a take-profit at 1.0600.
- Add a stop-loss at 1.0725.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.0700 and a take-profit at 1.0750.
- Add a stop-loss at 1.0635.
The EUR/USD pair wavered on Thursday morning as traders waited for the upcoming US GDP and inflation data. It dropped to a low of 1.0666, its lowest point since May 1st as the US dollar rose slightly.
US and European inflation data ahead
The EUR/USD pair drifted downwards after the US released mixed new home sales and building permits numbers on Wednesday. According to the statistics agency, new home sales dropped from 698k in April to 619k in May, missing the estimated 636k.
Another report showed that the country’s building permits dropped by 2.8% to over 1.399 million. The drop was better than the expected 1.386 million. These numbers came a day after the US published encouraging consumer confidence data.
The next two days will be important for the EUR/USD pair as Europe and the US publish important economic numbers. Europe will release the latest services and industrial sentiment data on Thursday while the US will publish the latest GDP and durable goods orders.
Based on the second estimate of the GDP data, economists expect the numbers to show that the economy expanded by 1.3% in Q1 after growing by 3.4% in Q4. They also expect that the headline and core durable goods orders to come in at minus 0.5% and 0.2%, respectively.
The most important data to watch will come out on Friday when the US will publish the latest PCE inflation report. This is a crucial report because it is the Fed’s favorite inflation gauge since it considers products and services in urban and rural areas.
Economists polled by Reuters expect the data to show that the headline PCE slowed to 2.6% in May from 2.7% in April. The core PCE is expected to be 2.6%. If these numbers are correct, they will signal that the Fed will maintain a hawkish tone.
Top Forex Brokers
EUR/USD Technical Analysis
The EUR/USD exchange rate retreated to a low of 1.0666 on Wednesday as the focus shifts to the upcoming US PCE report. It has formed a triple-bottom pattern, a popular bullish sign.
The pair has remained below the 50-period and 25-period Exponential Moving Averages (EMA) while the Awesome Oscillator has turned red. Also, the Relative Strength Index (RSI) has moved below 50. It was hovering at the 78.6% retracement point.
Therefore, the pair will likely have a bearish breakout ahead of the US PCE report. A move below the support at 1.0666 will point to more downside.
Want to start trading our free Forex signals? Here are the top 100 Forex brokers we recommend here.