Bullish View
- Buy the EUR/USD pair and set a take-profit at 1.0980.
- Add a stop-loss at 1.0775.
- Timeline: 1-2 days.
Bearish View
- Set a sell-stop at 1.0875 and a take-profit at 1.0775.
- Add a stop-loss at 1.0980.
The EUR/USD tilted upwards ahead of the upcoming US election and the Federal Reserve interest rate decision. It rose to a high of 1.0915, its highest level in over two weeks, and 1.45% higher than its lowest point this month.
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US Election and Fed Decision Ahead
The EUR/USD exchange rate continued its strong uptrend this week after the US published weak nonfarm payroll numbers last Friday.
According to the Bureau of Labor Statistics (BLS), the economy created just 12,000 jobs in October, while the unemployment rate remained above 4.0% during the month.
That report largely confirmed the view that the Federal Reserve will continue cutting interest rates in its Wednesday meeting. Most analysts expect the bank to cut rates by 0.25%, which will bring them to between 4.75% and 5.25%.
This week’s Fed decision, while important, will be overshadowed by the general election that pits Donald Trump against Kamala Harris.
The two candidates have different economic policies. Trump favors a weaker US dollar, more tariffs, and tax cuts, while Harris wants more government spending on housing and other social issues.
A Trump win will likely lead to some uncertainty, which will push the US dollar higher, while a Harris win will be a continuation of Biden’s policies. Therefore, the EUR/USD will likely be highly volatile in the next few days.
The upcoming US economic numbers will likely have no impact on the pair. S&P Global and the Institute of Supply Management (ISM) will publish the October services PMI data, which will show that the sector continued to expand in October.
The pair will also likely react mildly to the upcoming Christine Lagarde statement, in which she will talk about the European Union and what to expect from her bank.
EUR/USD Technical Analysis
The EUR/USD pair bounced back after bottoming at 1.0760 last week. This was a notable level since it connected the lower highs levels since October last year.
The pair has remained below the Ichimoku cloud indicator. It has also remained below the 50-day moving average and the key resistance level at 1.0980, its highest swing on March 8.
The two lines of the MACD indicator have formed a bullish crossover pattern, which is a positive sign.
Therefore, the pair will likely continue rising as bulls target the key resistance point at 1.0980. This view will be invalidated if the price moves below the ascending trendline.
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