Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0000.
- Add a stop-loss at 0.9765.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 0.9750.
- Add a stop-loss at 0.9950.
The EUR/USD held steady in the overnight session as the market reflected on the relatively weak European and American economic data. It rose to 0.9893, which was the highest level since October 6. The pair has risen by more than 3.56% from its lowest level this month.
Recession risks rise
The EUR/USD pair rose slightly amid rising risks of a recession. Data published on Monday showed that the flash manufacturing and services PMIs declined to 46.6 and 48.2, respectively. Output dropped in most European countries, including Germany, Italy, and France.
The same trend happened in the United States, where the flash manufacturing and services PMI retreated to 49.9 and 43.6. The decline was lower than the median estimates of 51.0 and 49.2, respectively.
European and American companies complained about the rising inflation and slow demand. Inflation in Europe jumped to 10.1% in September while American CPI and producer price index remained at an elevated level.
The main catalyst for the EUR/USD pair will be the upcoming consumer confidence data from the US. With inflation still at an elevated level, analysts expect the data to show that consumer confidence dropped from 108 in September to 106.5 in October.
The US will also publish the latest house price index (HPI) data. Economists expect that house prices continued retreating in August as mortgage rates rose.
The EUR/USD is also rising as some investors price in a Fed pivot. This view is mostly because of a report by the Wall Street Journal (WSJ) that said that some Fed officials were concerned about more jumbo hikes.
The pair will also react to the latest European Central Bank (ECB) decision scheduled for Thursday. With inflation rising, analysts expect that the bank will hike by another 0.75%.
EUR/USD forecast
The EUR/USD continued rising ahead of the upcoming ECB decision and US consumer confidence data. It rose above the 38.2% Fibonacci Retracement level and above the 50-period moving average. Its highest point was along the upper side of the symmetrical triangle pattern. The Relative Strength Index (RSI) has been in a strong bullish trend while the pair is above the standard pivot point.
Therefore, the pair will likely continue rising as investors target the parity level at 1.000. This price is also at the second resistance of the standard pivot point.
Ready to trade our free currency signals? Here are the best Forex brokers to choose from.