Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0920.
- Add a stop-loss at 1.1040.
- Timeline: 1-2 days.
Bullish view
- Set a buy-stop at 1.100 and a take-profit at 1.1065.
- Add a stop-loss at 1.0925.
The EUR/USD price stalled after a series of mixed economic data from the United States and Europe. The pair retreated to a low of 1.0975, a few points below this month’s high of 1.1017.
European inflation, US GDP data
The EUR/USD pair came under pressure after the encouraging European inflation and consumer confidence data. There are signs that the bloc’s inflation is in a downtrend.
In Germany, the bloc’s biggest economy, the headline CPI dropped by -0.4% in November, which translated to a YoY increase of 3.2%. That was the lowest inflation growth in months. Economists were expecting the data to show that inflation would drop to 3.5%.
The closely-watched harmonised inflation dropped by 0.7% MoM, lower than the expected drop of 0.3%. On a YoY basis, inflation rose by 2.3%. Elsewhere, in Spain, the headline CPI dropped by 0.4% MoM and to 3.2% YoY.
These numbers mean that Europe’s inflation is falling at a faster pace than what analysts expected. The decline is mostly because of the falling energy prices. The price of gasoline and natural gas has moved downwards in the past few months.
The other report by the European Commission showed thar business and consumer confidence improved slightly in November. Consumer confidence improved to -16.9 while services sentiment rose to 4.9.
The EUR/USD price also retreated after the strong US GDP data. According to the statistics agency, the economy grew by 5.2% in Q3, the fastest quarterly increase in years. This increase was better than the previous estimate of 4.9%.
This strong report means that the Fed has succeeded in engineering a soft landing since inflation is also falling. Therefore, if inflation continues its downtrend, there is a likelihood that the Fed will leave rates unchanged in the coming months and then slash them by June next year.
The next EUR/USD news to watch will be the upcoming French and European inflation and German jobs numbers. In the US, the statistics agency will release the latest PCE data.
EUR/USD technical analysis
The EUR/USD exchange rate has drifted downwards in the past few days. It has dropped from this week’s high of 1.1017 to 1.0980. The pair has also retreated slightly below the first resistance of the Woodie pivot point.
It has remained above the 50-period moving average while the Relative Strength Index (RSI) has dropped below the overbought level. Therefore, the pair will likely drop to the Woodie pivot point at 1.0920 as the rally takes a breather.
This view will be invalidated if the price moves above this week’s high of 1.1017. If it happens, the next price to watch will be the second pivot point resistance at 1.1040.
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