Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0695.
- Add a stop-loss at 1.0950.
- Timeline: 1-2 days,
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0950.
- Add a stop-loss at 1.0695.
The EUR/USD exchange rate has dropped in the past few days as investors reflected on the latest Federal Reserve decision. It dropped to the psychological point at 1.0800, down from the year-to-date high of 1.0950.
US consumer confidence and European inflation data
The EUR/USD pair has pulled back in the past few days after the Federal Reserve made its second interest rate decision of the year. It left rates unchanged between 4.25% and 4.50% as it continued to observe the state of the economy.
While the recent US inflation data were encouraging, the Fed is concerned about how Donald Trump’s tariffs will impact them in future. The Fed believes that the country’s inflation will remain higher for longer while the economic growth will deteriorate, leading to stagflation. Officials still expect two more rate cuts this year.
The next key US data to watch will be the upcoming consumer confidence report on Tuesday. This will be a key report that will provide information on the state of the American consumer as inflation jitters rise. They are also concerned about the ongoing layoffs in the US government engineered by Elon Musk.
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The US will next release the latest personal consumption expenditure (PCE) data on Friday. This is key data that shows the change in prices of prices in the urban and rural areas in the US and is the Fed’s favorite inflation gauge.
The EUR/USD will also react to the upcoming European consumer confidence, PMI, and inflation data. These numbers will help the ECB make its next interest rate decision on April 17.
Odds are that the bank will leave rates unchanged now that European countries have started offering stimulus in the form of more spending. Germany voted to boost borrowing to invest on defense and infrastructure.
EUR/USD technical analysis
The EUR/USD exchange rate has retreated in the past few days, moving from a high of 1.0950 to 1.0815. It has dropped and retested the 61.8% Fibonacci Retracement level at 1.0820. Also, the pair formed a small double-top pattern at 1.0950. A double bottom is one of the most bearish patterns in the market.
Most oscillators have started pointing downwards, signaling that it has lost momentum. Therefore, the most likely scenario is where the pair retreats and retests the 50% retracement point at 1.0695. A move above the double-top point at 1.0950 will invalidate the bearish outlook.
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