Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0500.
- Add a stop-loss at 1.0400.
- Timeline: 1-2 days.
Bearish view
- Set a sell-stop at 1.0450 and a take-profit at 1.0400.
- Add a stop-loss at 1.0525.
The EUR/USD exchange rate wavered close to a key resistance as geopolitics issues rose and the Federal Reserve maintained its hawkish tone. The pair was trading at 1.0460 on Monday morning, a few pips below the key resistance level at 1.0500.
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European inflation data ahead
The EUR/USD pair wavered even as the market embraced a risk-on sentiment as Donald Trump’s tariffs neared.
Trump has said that the US will impose a 25% tariff on imported steel and aluminum from March. He has also said that more tariffs on Canada and Mexican goods will start next month if a deal is not reached.
These tarifs will have a big impact on all these countries, since they do a lot of business with the US. He has also said that he will impose tariffs on European goods, a move that may disrupt trade flows worth billions. For example, all Porsche vehicles sold in the US are made in Germany, meaning that their prices may go up by 25%.
The next key EUR/USD news will be Monday’s consumer price index data for Janauary. Economists expect the numbers to reveal that the headline consumer price index dropped from 0.4% in December to minus 0.3% in January. The annualized figure will remain unchanged at 2.5%.
Economists also expect the core CPI to remain unchanged at minus 1.0% and 2.7% on a MoM and YoY, respectively.
The other key EUR/USD news to watch will be the upcoming US consumer confidence data scheduled for Tuesday. Several Fed officials like Raphael Bostic, Tom Barkin, Michele Bowman, and Philip Harker will talk. However, their statements will not move the pair as the market already expects the Fed to be less hawkish.
EUR/USD Technical Analysis
The EUR/USD pair has moved sideways in the past few weeks. It has remained inside the key support and resistance levels at 1.0215 and 1.0505. The pair has moved slightly above the 50-day moving average, while the Relative Strength Index (RSI) and the MACD indicators have continued rising.
Therefore, the pair’s outlook at this stage is relatively neutral, with the key point to watch being at 1.0506. A break above that level will be a sign that bulls have prevailed, which will take it higher to 1.0600.
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