Bearish View
- Sell the EUR/USD pair and set a take-profit at 1.0700.
- Add a stop-loss at 1.0900.
- Timeline: 1-2 days.
Bullish View
- Buy the EUR/USD pair and set a take-profit at 1.0900.
- Add a stop-loss at 1.0700.
The EUR/USD pair has been in a strong downtrend as the US dollar index and bond yields jumped to the highest level since July. It was trading at 1.0800 on Monday morning, down by 3.7% from its highest level this year. It is also hovering near its lowest level since August 2.
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US Election and Key Economic Data
The EUR/USD pair will have substantial volatility this week as traders react to important upcoming economic data and as the countdown to the US election continues.
The first data to watch will be the consumer confidence report scheduled on Tuesday. This is a highly important number because of the importance of consumer spending on the US economy since it is the biggest constituent.
The other important will be the JOLTS job openings report on Tuesday. This report shows the number of job vacancies in the US economy. It will be followed by ADP’s private payroll data and then the official nonfarm payroll (NFP) numbers on Friday.
These numbers will influence the EUR/USD because of the impact of their impact on the Federal Reserve. If the jobs numbers are weak, the Fed will continue cutting rates in its November meeting.
On the other hand, if the unemployment rate continues falling, the Fed may decide to avoid a rate cut in its upcoming meeting.
The EUR/USD currency pair will also react to the upcoming European inflation data. Economists expect the data to reveal that the bloc’s inflation rose slightly in October. Precisely, the median estimate is that the CPI rose from 1.7% in September to 1.9% in October.
The other key catalyst will be the upcoming US election, in which Donald Trump is doing well in some swing states.
EUR/USD Technical Analysis
The EUR/USD pair has been in a strong downward trend after forming a double-top pattern at 1.1200 in September. It dropped below the key support point at 1.100, the neckline of the double-top.
The 100-day and 50-day moving averages are about to cross each other. Also, the Relative Strength Index (RSI) and the Stochastic Oscillator have pointed upwards from their oversold levels.
The pair has moved below the Ichimoku cloud indicator. Therefore, the pair will likely continue falling as sellers target the key support at 1.0700.
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