Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0765.
- Add a stop-loss at 1.0550.
- Timeline: 1 day.
Bearish view
- Set a sell-stop at 1.0650 and a take-profit at 1.0550.
- Add a stop-loss at 1.0750.
The EUR/USD pair rebounded in the American and Asian sessions as the bond market cooled down. The euro rose to a high of 1.0676, the highest level since September 20th. It has jumped by more than 2.17% from the lowest point this month.
European Central Bank and Powell's statement
The EUR/USD pair continued rising as traders focused on the performance of the bond market. American bond yields initially jumped to the highest level in decades as concerns about the economy continued.
Bond yields then retreated after Bill Ackman, the respected founder of Pershing Square Capital, said that he had exited his short position on American bonds. He argued that shorting bonds was significantly risky for now.
As a result, the yield on the 10-year dropped to 4.83% after it peaked at 5.02% on Monday. The 30-year bond yield dropped to 4.89%, down from last week’s high of over 5.05%.
The next important EUR/USD news will be the upcoming US and European flash manufacturing and services PMI numbers. Economists polled by Reuters expect the data to show that the two indices in Europe dropped to 47.4 and 48.7 in October.
Similarly, economists believe that the two indices remained below 50 during the month. If analysts are correct, these numbers will point to a slowdown of the US and European economies. A PMI figure of less than 50 is a sign that an industry is contracting.
The biggest catalyst for the EUR/USD pair will be the upcoming European Central Bank (ECB) decision. Economists believe that the bank will leave rates unchanged at 4.50%, the highest point on record.
Jerome Powell, the Federal Reserve Chair will give a speech on Wednesday followed by the first reading of US GDP data on Thursday.
EUR/USD technical analysis
The EUR/USD pair continued rising as the bond market cooled. On the 4H chart, the pair moved above the 23.6% Fibonacci Retracement level. It has also moved above the 25-period and 50-period moving averages. The pair’s Relative Strength Index (RSI) has moved above the overbought level.
Notably, the pair has also formed a rising broadening wedge pattern, which is one of the most bearish signs. Therefore, the pair will likely continue rising as buyers target the upper side of the wedge and the 38.2% retracement point at 1.0765.
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