Bullish View
Buy the EUR/USD pair and set a take-profit at 1.0760.
Add a stop-loss at 1.0580.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 1.0635 and a take-profit at 1.0585.
Add a stop-loss at 1.0760.
The EUR/USD exchange rate crashed to its lowest level since April and formed a death cross, pointing to more downside in the coming weeks. It dropped to a low of 1.0630, much lower than the year-to-date high of 1.1215.
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The pair’s sell-off continued after the Fed continued cutting interest rates in its meeting last week. It cut by 0.25% to between 4.50% and 4.75%, a trend that may continue in the coming months as the labor market weakness persists.
The next key catalyst to watch will be the upcoming US Consumer Price Index (CPI) data. Economists polled by Reuters expect the numbers to show that the headline CPI remained at 2.4% in October. Its core CPI is expected to remain at 3.3%.
The other important EUR/USD news will be the upcoming European GDP data for the third-quarter. Economists see the GDP rising from 0.6% in Q2 to 0.9% in Q3. On a QoQ basis, the GDP is also expected to rise from 0.2% to 0.4%.
The EUR/USD exchange rate also retreated as the market reacted to the US election in which Donald Trump won the election. Analysts believe that Trump’s policies would be highly inflationary in the coming months. Some of the highly inflationary things are mass deportations and tariffs.
EUR/USD Technical Analysis
The EUR/USD exchange rate has been in a strong sell-off in the past few days. This sell-off happened after the pair formed a double-top pattern around the 1.1200 level.
The pair has also formed a death cross as the 50-day and 200-day Weighted Moving Averages (WMA) crossed each other. In most periods, this is one of the most bearish signs in the market.
The MACD indicator has moved below the zero line, while the Relative Strength Index (RSI) fell to 35. It has also dropped to the extreme oversold level of the Murrey Math Lines tool.
Most notably, the pair is nearing the crucial point at 1.0595, its lowest level on April 16. Therefore, with the pair being in the extreme oversold level, there are chances that it will bounce back as traders target the key resistance level at 1.0760, its lowest point on October 23rd.
The bullish view will become invalid if the pair drops below the key support at 1.0595, its lowest swing in April.
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