Bearish View
- Sell the EUR/USD pair and set a take-profit at 1.0770.
- Add a stop-loss at 1.0950.
- Timeline: 1-2 days.
Bullish View
- Set a buy-stop at 1.0900 and a take-profit at 1.0980.
- Add a stop-loss at 1.0770.
The EUR/USD exchange rate fell for three straight days, continuing the downtrend that started on 1.1213, when it peaked at 1.1213. It dropped to a low of 1.0850, its lowest point since August 2nd.
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ECB Interest Rate Decision
The EUR/USD pair continued falling as the US dollar index rose to $103.40, its highest point since August 2nd. It has rallied by over 3.38% from its lowest level this year as odds of more Federal Reserve cuts reduced.
The US has published several important strong economic numbers in the past two weeks. Data released earlier this month showed that the unemployment rate dropped to 4.1% in September as the economy created over 254,000 jobs.
Another report released last week shows that the country’s inflation fell at a slower pace than expected in September. The headline Consumer Price Index (CPI) fell from 2.5% in August to 2.4% in September. Core inflation remained unchanged at 3.2%.
The next key US data to watch will come out on Thursday when the statistics agency releases the latest retail sales data. These are important numbers because of the number of people employed in the retail sector and the fact that consumer spending is the biggest part of the GDP.
The US will also publish other important economic data like manufacturing and industrial production numbers. It will also release the latest initial and continuing jobless claims data.
The most important catalyst for the EUR/USD pair will be the upcoming European Central Bank (ECB) decision. Analysts expect the bank to cut interest rates by another 0.25% to 3.40% and the deposit facility rate from 3.50% to 3.25%.
The ECB has achieved its inflation mandate since the headline Consumer Price Index retreated from 2.2% in August to 1.8%. There are also signs that the bloc’s economy is in trouble, with Germany expected to go into a recession this year.
EUR/USD Technical Analysis
The EUR/USD pair has continued in a strong downward trend in the past few days. It has retreated from the year-to-date high of 1.1200 to 1.0855, its lowest point since August 2nd.
The pair has flipped the support at 1.0980 - its March 8 high - into a new resistance. It has also fallen below the 50-day and 200-day moving averages.
Meanwhile, the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued falling. Therefore, the pair will likely continue falling, with the next reference point to watch being at 1.0770. This price connects its lowest swings since October 3rd last year.
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