Bearish view
Bullish view
- Set a buy-stop at 1.0890 and a take-profit at 1.0980.
- Add a stop-loss at 1.0800.
The EUR/USD pair drifted downwards as the US dollar index continued crawling back. The pair dropped to a low of 1.0833, the lowest level since April 3rd. It has dropped by over 1% from the highest level this month.
The pair dropped as the focus turned to the upcoming US inflation data scheduled on Wednesday. Economists expect the data to show that the headline consumer price index (CPI) dropped from 6.0% to 5.2% in March. Core inflation is expected to have jumped to 5.9%, which is still higher than the Fed estimate of 2.0%.
The pair will also react to the upcoming bank earnings season that will start on Friday. Companies like JP Morgan, Citigroup, and Wells Fargo will publish their results on Friday. These results will be important because of the recent concerns about the banking sector.
A key concern is that the commercial real estate industry is imploding as vacancies jump and interest rates remain at an elevated level. Embattled regional banks are the biggest lenders to the commercial real estate industry.
EUR/USD analysis (daily chart)
On the daily chart, the pair has been in a bullish trend in the past few weeks. It rose to a high of 1.1026 on February 2 of this year and then pulled back to 1.0513 on March 10. The initial price was slightly above the 50% Fibonacci Retracement level.
It seems to be forming a double-top pattern, which is usually a bearish sign. The pair is slightly above the Woodie pivot point and is above the 25-day and 50-day exponential moving averages.
Therefore, in the near term, the pair will likely retreat as sellers target the neckline of the double-top pattern at 1.0513, which is about 3% below the current level.
The bearish sign will be invalidated if the price moves above the important resistance at 1.1026. It will signal that there are still more buyers in the market who will be keen to push it to the second resistance point at 1.1200.
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