Bearish view
- Sell the EUR/USD pair and set a take-profit at 0.9862.
- Add a stop-loss at 1.0500.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0100.
- Add a stop-loss at. 0.9900.
The EUR/USD price continued rising as global risks eased and hopes that the Federal Reserve will start its pivot rose. The pair jumped to a high of 1.000, which was the highest level since September 21st. It has risen by more than 4.5% from its lowest point last week.
Europe inflation and Fed pivot
The EUR/USD price has been in a strong bullish trend in the past few days as investors focus on the falling volatility and the rising hopes that the Fed will start pivoting in the next few months.
Data published this week showed that the American economy was slowing down. For example, on Monday, numbers by the Institute of Supply Management revealed that the country’s manufacturing PMI declined in September.
The organization is expected to publish its non-manufacturing PMI later on Wednesday. These numbers are expected to show that the sector remained under intense pressure during the month. On Tuesday, numbers by the statistics agency showed that the number of job vacancies dropped by more than 1.1 million in August.
Other central banks have already started to pivot. On Tuesday, the Reserve Bank of Australia slowed its pace of rate hikes. It increased rates by a "business as usual" 0.25% increase
The EUR/USD pair also surged after the strong European inflation data. On Friday, numbers by Eurostat showed that European inflation increased by 10% in September. And on Tuesday, the agency said that Europe's producer price index (PPI) rose by 43.3% in August after rising by 38% in the previous month. In Italy, PPI jumped by 50.5%.
The EUR/USD price will react to the latest European services PMI data. Analysts expect these numbers to be more encouraging than the disappointing manufacturing PMI data that was published on Monday. The services sector has done well because of the robust tourism industry.
EUR/USD forecast
The four-hour chart shows that the EUR/USD pair has been in a strong recovery in the past few days. As it rose, the pair managed to move above the important resistance level at. 0.9862, which was the lowest level on September 6. It also rose above the 25-day and 50-day EMAs. The two have even formed a bullish crossover pattern while the RSI has moved above the overbought level.
Therefore, while the pair has more room to run, there is a high probability that it will pull back and retest the support level at 0.9862 and then resume the bullish trend.
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