Bullish view
Bearish view
- Set a sell-stop at 1.0900 and a take-profit at 1.0800.
- Add a stop-loss at 1.100.
The EUR/USD pair retreated during the American session as the US dollar index (DXY) bounced back after the latest FOMC minutes. The pair retested the psychological point at 1.0900, lower than this week’s high of 1.0965.
Fed minutes and the US housing sector
The EUR/USD pair retreated after the US published weak home sales data. Data by the National Association of Realtors showed that existing home sales plunged by 4.1% in October to 3.79 million, the lowest level in over 13 years.
The housing sector is suffering as interest and mortgage rates remains at the highest point in more than two decades. Mortgage rates have retreated recently as investors expect that the Federal Reserve will not hike rates again.
The pair also dropped after the latest Fed minutes. These minutes revealed that most officials had a cautious tone in this month’s meeting. They are in no hurry to hike rates again now that inflation continued falling. The recent data showed that the Consumer Price Index (CPI) dropped from 3.7% in September to 3.2% in October.
The other important EUR/USD news was a statement by Christine Lagarde, the head of the European Central Bank. She said that it was too early for the bank to declare victory on its inflation fight. The bank has already hiked rates to a record high of 4.5%, which has helped bring inflation to 2.9%.
The next catalyst for the EUR/USD pair will be the upcoming European consumer confidence data. Economists polled by Reuters expect these numbers to show that confidence dropped to -17.9 in October.
In the US, the statistics agency will release the latest durable goods order numbers. Economists polled by Reuters expect the data to show that durable goods orders fell by 3.2% in October. The US will also publish the initial and continuing jobless claims and oil inventories data.
EUR/USD technical analysis
The EUR/USD pair peaked at 1.0965 on Tuesday and then pulled back after the Fed minutes. It has retreated to the psychological level at 1.0900 and remains above the 25-day and 50-day moving averages.
The Relative Strength Index (RSI) has retreated from the overbought point of 80 to below 60. Also, the Average Directional Index (ADX) has pointed downwards. The pair remains above the upper side of the rising broadening wedge. Therefore, the pair will likely resume the bullish trend as buyers attempt to retest this week’s high of 1.100.
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