Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0985 (March 8 high).
- Add a stop-loss at 1.0750.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0840 and a take-profit at 1.0750.
- Add a stop-loss at 1.0980.
The EUR/USD pair had a calm start of the month as focus shift to this week’s European Central Bank (ECB) decision and US non-farm payrolls (NFP) data. It was also muted after the strong European and US inflation numbers that came out on Friday.
ECB decision and US NFP data
The EUR/USD pair will be in focus this week as the ECB delivers its interest rate decision on Thursday. This will be a notable meeting because the ECB has signalled that it will deliver the first interest rate cut. If this happens, it will become the second major European central bank to slash rates after the Swiss National Bank (SNB) and Rikbsank.
I suspect that the ECB will then signal that it will embrace a wait-and-see stance since inflation is rising again. Data released on Friday revealed that the headline Consumer Price Index (CPI) rose from 2.4% in April to 2.6% while the core CPI rose from 2.7% to 2.9%. These numbers were higher than the median estimate of 2.5% and 2.7%, They were also higher than the ECB’s target of 2.0%.
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The other important EUR/USD news will come out on Friday when the US releases its non-farm payroll (NFP) data. Economists polled by Reuters expect the data to reveal that the economy added over 150k jobs in May while the unemployment rate remained at 3.9%.
Before the official numbers, ADP will publish its estimates for the private sector payrolls while the BLS will release the JOLTs job openings data. These numbers will come after the US published April’s Personal Consumption Expenditure (PCE) data.
According to the Bureau of Labor Statistics (BLS), the PCE index remained at 2.7% while the core figure was stuck at 2.8%. Analysts expect that the Federal Reserve will maintain interest rates unchanged for a while.
EUR/USD technical analysis
The EUR/USD exchange rate has remained in a tight range in the past few days. On the daily chart, it has moved slightly below the upper side of the symmetrical triangle chart pattern. The pair has moved slightly above the Ichimoku cloud indicator and the 50-day moving average.
It has also remained at the 23.6% Fibonacci Retracement indicator while the MACD indicator has moved above the neutral point. Therefore, the pair will likely remain in this consolidation phase on Monday. More upside will be confirmed if it moves above last month’s high of 1.0885. The alternative scenario is where it drops and retests the lower side of the triangle pattern.
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